Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2018shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | B COMMUNICATIONS LTD |
Entity Central Index Key | 0001402606 |
Trading Symbol | BCOM |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Period Focus | FY |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2018 |
Document Fiscal Year Focus | 2018 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Accelerated Filer |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Ex Transition Period | false |
Entity Common Stock, Shares Outstanding | 37,274,645 |
Consolidated Statements of Fina
Consolidated Statements of Financial Position ₪ in Millions, $ in Millions | Dec. 31, 2018ILS (₪) | Dec. 31, 2018USD ($) | Dec. 31, 2017ILS (₪) | ||
Current assets | |||||
Cash and cash equivalents | ₪ | [1] | ₪ 1,104 | ₪ 2,386 | ||
Investments | ₪ | 1,780 | [1] | 596 | ||
Trade receivables, net | ₪ | 1,773 | [1] | 1,915 | ||
Other receivables | ₪ | 269 | [1] | 270 | ||
Related party | ₪ | [1] | 43 | |||
Inventory | ₪ | 97 | [1] | 125 | ||
Total current assets | ₪ | 5,023 | [1] | 5,335 | ||
Non-current assets | |||||
Long-term trade and other receivables | ₪ | 470 | [1] | 493 | ||
Property, plant and equipment | ₪ | 6,313 | [1] | 6,940 | ||
Intangible assets | ₪ | 4,227 | [1] | 5,840 | ||
Deferred expenses and non-current investments | ₪ | 509 | [1] | 558 | ||
Broadcasting rights, net of rights exercised | ₪ | 60 | [1] | 454 | ||
Rights of use assets | ₪ | 1,504 | [1] | |||
Deferred tax assets | ₪ | 1,205 | [1] | 1,019 | ||
Investment Property | ₪ | 64 | [1] | |||
Total non-current assets | ₪ | 14,352 | [1] | 15,304 | ||
Total assets | ₪ | 19,375 | [1] | 20,639 | ||
Current liabilities | |||||
Bank loans and credit and debentures | ₪ | 3,997 | [1] | 1,858 | ||
Leases rights liabilities | ₪ | 445 | [1] | |||
Trade and other payables | ₪ | 1,702 | [1] | 1,719 | ||
Current tax liabilities | ₪ | 8 | [1] | 160 | ||
Provisions | ₪ | 175 | [1] | 94 | ||
Employee benefits | ₪ | 581 | [1] | 280 | ||
Total current liabilities | ₪ | 6,908 | [1] | 4,111 | ||
Non-current liabilities | |||||
Bank loans and debentures | ₪ | 9,637 | [1] | 12,437 | ||
Leases rights liabilities | ₪ | 1,106 | [1] | |||
Employee benefits | ₪ | 445 | [1] | 272 | ||
Other liabilities | ₪ | 175 | [1] | 234 | ||
Provisions | ₪ | 38 | [1] | 40 | ||
Deferred tax liabilities | ₪ | 302 | [1] | 459 | ||
Total non-current liabilities | ₪ | 11,703 | [1] | 13,442 | ||
Total liabilities | ₪ | 18,611 | [1] | 17,553 | ||
Equity | |||||
Attributable to shareholders of the company | ₪ | 228 | [1] | 1,246 | ||
Non-controlling interests | ₪ | 536 | [1] | 1,840 | ||
Total equity | ₪ | 764 | [1] | 3,086 | ||
Total liabilities and equity | ₪ | ₪ 19,375 | [1] | ₪ 20,639 | ||
USD | |||||
Current assets | |||||
Cash and cash equivalents | $ | $ 295 | ||||
Investments | $ | 475 | ||||
Trade receivables, net | $ | 473 | ||||
Other receivables | $ | 71 | ||||
Related party | $ | |||||
Inventory | $ | 26 | ||||
Total current assets | $ | 1,340 | ||||
Non-current assets | |||||
Long-term trade and other receivables | $ | 126 | ||||
Property, plant and equipment | $ | 1,684 | ||||
Intangible assets | $ | 1,128 | ||||
Deferred expenses and non-current investments | $ | 136 | ||||
Broadcasting rights, net of rights exercised | $ | 16 | ||||
Rights of use assets | $ | 401 | ||||
Deferred tax assets | $ | 322 | ||||
Investment Property | $ | 17 | ||||
Total non-current assets | $ | 3,830 | ||||
Total assets | $ | 5,170 | ||||
Current liabilities | |||||
Bank loans and credit and debentures | $ | 1,066 | ||||
Leases rights liabilities | $ | 119 | ||||
Trade and other payables | $ | 454 | ||||
Current tax liabilities | $ | 2 | ||||
Provisions | $ | 47 | ||||
Employee benefits | $ | 155 | ||||
Total current liabilities | $ | 1,843 | ||||
Non-current liabilities | |||||
Bank loans and debentures | $ | 2,571 | ||||
Leases rights liabilities | $ | 295 | ||||
Employee benefits | $ | 119 | ||||
Other liabilities | $ | 47 | ||||
Provisions | $ | 10 | ||||
Deferred tax liabilities | $ | 81 | ||||
Total non-current liabilities | $ | 3,123 | ||||
Total liabilities | $ | 4,966 | ||||
Equity | |||||
Attributable to shareholders of the company | $ | 61 | ||||
Non-controlling interests | $ | 143 | ||||
Total equity | $ | 204 | ||||
Total liabilities and equity | $ | $ 5,170 | ||||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Consolidated Statements of Inco
Consolidated Statements of Income ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2018ILS (₪)₪ / shares | [1] | Dec. 31, 2018USD ($)$ / shares | Dec. 31, 2017ILS (₪)₪ / shares | Dec. 31, 2016ILS (₪)₪ / shares | |
Statement Line Items [Line Items] | |||||
Revenues | ₪ | ₪ 9,321 | ₪ 9,789 | ₪ 10,084 | ||
Costs and expenses | |||||
Depreciation and amortization | ₪ | 2,387 | 2,117 | 2,161 | ||
Salaries | ₪ | 1,995 | 2,007 | 2,015 | ||
General and operating expenses | ₪ | 3,394 | 3,906 | 4,021 | ||
Impairment losses | ₪ | 2,294 | 129 | |||
Other operating expenses | ₪ | 635 | 20 | 21 | ||
Costs and expenses | ₪ | 10,705 | 8,179 | 8,218 | ||
Operating profit (loss) | ₪ | (1,384) | 1,610 | 1,866 | ||
Financing expenses (income) | |||||
Finance expenses | ₪ | 620 | 586 | 1,054 | ||
Finance income | ₪ | (89) | (69) | (123) | ||
Financing expenses, net | ₪ | 531 | 517 | 931 | ||
Profit (loss) after financing expenses, net | ₪ | (1,915) | 1,093 | 935 | ||
Share of loss in equity-accounted investee | ₪ | 3 | 5 | 5 | ||
Profit (loss) before income tax | ₪ | (1,918) | 1,088 | 930 | ||
Income tax expenses (benefit) | ₪ | (59) | 347 | 442 | ||
Net profit (loss) for the year | ₪ | (1,859) | 741 | 488 | ||
Profit (loss) attributable to: | |||||
Shareholders of the company | ₪ | (1,029) | 78 | (236) | ||
Non-controlling interests | ₪ | (830) | 663 | 724 | ||
Net profit (loss) for the year | ₪ | ₪ (1,859) | ₪ 741 | ₪ 488 | ||
Earnings (loss) per share | |||||
Basic | ₪ / shares | ₪ (34.44) | ₪ 2.62 | ₪ (7.92) | ||
Diluted | ₪ / shares | ₪ (34.44) | ₪ 2.62 | ₪ (7.92) | ||
USD | |||||
Statement Line Items [Line Items] | |||||
Revenues | $ | $ 2,487 | ||||
Costs and expenses | |||||
Depreciation and amortization | $ | 637 | ||||
Salaries | $ | 532 | ||||
General and operating expenses | $ | 906 | ||||
Impairment losses | $ | 612 | ||||
Other operating expenses | $ | 170 | ||||
Costs and expenses | $ | 2,857 | ||||
Operating profit (loss) | $ | (370) | ||||
Financing expenses (income) | |||||
Finance expenses | $ | 165 | ||||
Finance income | $ | (24) | ||||
Financing expenses, net | $ | 141 | ||||
Profit (loss) after financing expenses, net | $ | (511) | ||||
Share of loss in equity-accounted investee | $ | 1 | ||||
Profit (loss) before income tax | $ | (512) | ||||
Income tax expenses (benefit) | $ | (16) | ||||
Net profit (loss) for the year | $ | (496) | ||||
Profit (loss) attributable to: | |||||
Shareholders of the company | $ | (274) | ||||
Non-controlling interests | $ | (222) | ||||
Net profit (loss) for the year | $ | $ (496) | ||||
Earnings (loss) per share | |||||
Basic | $ / shares | $ (9.19) | ||||
Diluted | $ / shares | $ (9.19) | ||||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2018ILS (₪) | [1] | Dec. 31, 2018USD ($) | Dec. 31, 2017ILS (₪) | Dec. 31, 2016ILS (₪) | |
Statement Line Items [Line Items] | |||||
Net profit (loss) for the year | ₪ | ₪ (1,859) | ₪ 741 | ₪ 488 | ||
Items of comprehensive profit (loss), net of tax | ₪ | 42 | (8) | (15) | ||
Total comprehensive profit (loss) for the year | ₪ | (1,817) | 733 | 473 | ||
Attributable to: | |||||
Shareholders of the Company | ₪ | (1,018) | 76 | (240) | ||
Non-controlling interests | ₪ | (799) | 657 | 713 | ||
Total comprehensive profit (loss) for the year | ₪ | ₪ (1,817) | ₪ 733 | ₪ 473 | ||
USD [Member] | |||||
Statement Line Items [Line Items] | |||||
Net profit (loss) for the year | $ | $ (496) | ||||
Items of comprehensive profit (loss), net of tax | $ | 11 | ||||
Total comprehensive profit (loss) for the year | $ | (485) | ||||
Attributable to: | |||||
Shareholders of the Company | $ | (271) | ||||
Non-controlling interests | $ | (214) | ||||
Total comprehensive profit (loss) for the year | $ | $ (485) | ||||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity ₪ in Millions, $ in Millions | Share capitalILS (₪)shares | Share premiumILS (₪) | Treasury SharesILS (₪) | Other reservesILS (₪) | Retained earningsILS (₪) | TotalILS (₪) | Non-Controlling interestsILS (₪) | ILS (₪) | TotalUSD ($) | |||
Beginning balance at Dec. 31, 2015 | ₪ 3 | ₪ 1,057 | [1] | ₪ (47) | ₪ 32 | ₪ 1,045 | ₪ 2,346 | |||||
Beginning balance, shares at Dec. 31, 2015 | shares | [2] | 29,889,045 | ||||||||||
Exercise of options in a subsidiary | (2) | (2) | 6 | ₪ 4 | ||||||||
Transactions with non-controlling interest, net of tax | 722 | 722 | 128 | 850 | ||||||||
Changes during: | ||||||||||||
Dividends to non-controlling interests | (1,062) | |||||||||||
Dividend to shareholders | (355) | (355) | (355) | |||||||||
Other comprehensive profit (loss), net of tax | 3 | (7) | (4) | (11) | ||||||||
Net profit (loss) for the year | (236) | (236) | 724 | 488 | ||||||||
Comprehensive profit (loss) for the year | 3 | (243) | (240) | 713 | 473 | |||||||
Ending balance at Dec. 31, 2016 | ₪ 3 | 1,057 | [1] | (46) | 156 | 1,170 | 2,131 | |||||
Ending balance, shares at Dec. 31, 2016 | shares | [2] | 29,889,045 | ||||||||||
Changes during: | ||||||||||||
Dividends to non-controlling interests | (948) | |||||||||||
Other comprehensive profit (loss), net of tax | 1 | (3) | (2) | (6) | ||||||||
Net profit (loss) for the year | 78 | 78 | 663 | 741 | ||||||||
Comprehensive profit (loss) for the year | 1 | 75 | 76 | 657 | 733 | |||||||
Ending balance at Dec. 31, 2017 | ₪ 3 | 1,057 | [1] | (45) | 231 | 1,246 | 1,840 | 3,086 | $ 823 | |||
Ending balance, shares at Dec. 31, 2017 | shares | [2] | 29,889,045 | ||||||||||
Changes during: | ||||||||||||
Dividends to non-controlling interests | (505) | (505) | (134) | |||||||||
Other comprehensive profit (loss), net of tax | 7 | 4 | 11 | 31 | 42 | 11 | ||||||
Net profit (loss) for the year | (1,029) | (1,029) | (830) | (1,859) | [3] | (496) | ||||||
Comprehensive profit (loss) for the year | 7 | (1,025) | (1,018) | (799) | (1,817) | [3] | (485) | |||||
Ending balance at Dec. 31, 2018 | ₪ 3 | ₪ 1,057 | [1] | ₪ (38) | ₪ (794) | ₪ 228 | ₪ 536 | ₪ 764 | [3] | $ 204 | ||
Ending balance, shares at Dec. 31, 2018 | shares | [2] | 29,889,045 | ||||||||||
[1] | Represents an amount less than NIS 1. | |||||||||||
[2] | Net of treasury shares. | |||||||||||
[3] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows ₪ in Millions, $ in Millions | 12 Months Ended | |||||
Dec. 31, 2018ILS (₪) | Dec. 31, 2018USD ($) | Dec. 31, 2017ILS (₪) | Dec. 31, 2016ILS (₪) | |||
Cash flows from operating activities | ||||||
Net profit (loss) for the year | ₪ | ₪ (1,859) | [1] | ₪ 741 | ₪ 488 | ||
Adjustments: | ||||||
Depreciation and amortization | ₪ | 2,387 | [1] | 2,117 | 2,161 | ||
Loss from impairment of assets | ₪ | 2,294 | [1] | 129 | |||
Share of loss of equity accounted investees | ₪ | 3 | [1] | 5 | 5 | ||
Finance expenses, net | ₪ | 541 | [1] | 525 | 981 | ||
Capital gain, net | ₪ | (13) | [1] | (27) | (86) | ||
Income tax expenses | ₪ | (59) | [1] | 347 | 442 | ||
Change in inventory | ₪ | (5) | [1] | (35) | (20) | ||
Change in trade and other receivables | ₪ | 239 | [1] | 194 | 110 | ||
Change in trade and other payables | ₪ | (144) | [1] | 16 | (24) | ||
Changes in provisions | ₪ | 81 | [1] | 15 | (19) | ||
Changes in employee benefits | ₪ | 489 | [1] | (33) | (65) | ||
Change in other liabilities | ₪ | [1] | (34) | 23 | |||
Net income tax paid | ₪ | (467) | [1] | (473) | (534) | ||
Net cash provided by operating activities | ₪ | 3,486 | [1] | 3,487 | 3,462 | ||
Cash flows from investing activities | ||||||
Purchase of property, plant and equipment | ₪ | (1,216) | [1] | (1,131) | (1,193) | ||
Investment in intangible assets and deferred expenses | ₪ | (390) | [1] | (399) | (223) | ||
Proceeds from the sale of PP&E and investment property | ₪ | 315 | [1] | 98 | 138 | ||
Tax payments due to owners' loans | ₪ | [1] | (461) | ||||
Change in investments, net | ₪ | (1,168) | [1] | 301 | 621 | ||
Net withdrawal from restricted cash | ₪ | [1] | 155 | ||||
Tax payments regarding sale of investment property | ₪ | (201) | [1] | ||||
Other | ₪ | 42 | [1] | 3 | 15 | ||
Net cash used in investing activities | ₪ | (2,618) | [1] | (1,128) | (948) | ||
Cash flows from financing activities | ||||||
Proceeds from issuance of debentures and loans received | ₪ | 1,139 | [1] | 2,635 | 4,184 | ||
Repayment of debentures and loans | ₪ | (1,793) | [1] | (1,813) | (4,871) | ||
Interest paid | ₪ | (523) | (537) | (915) | |||
Dividends paid by Bezeq to non- controlling interests | ₪ | (505) | [1] | (948) | (1,062) | ||
Payments of principal and interest for leases | ₪ | (422) | [1] | ||||
Transactions with non-controlling interests | ₪ | [1] | 978 | ||||
Dividends to shareholders | ₪ | [1] | (355) | ||||
Payments to Eurocom DBS | ₪ | [1] | (61) | (256) | |||
Others | ₪ | (46) | [1] | (11) | (36) | ||
Net cash used in financing Activities | ₪ | (2,150) | [1] | (735) | (2,333) | ||
Net increase (decrease) in cash and cash equivalents | ₪ | (1,282) | [1] | 1,624 | 181 | ||
Cash and cash equivalents as at the beginning of the year | ₪ | 2,386 | [1] | 762 | 581 | ||
Cash and cash equivalents as at the end of the year | ₪ | ₪ 1,104 | [1] | ₪ 2,386 | [1] | ₪ 762 | |
USD | ||||||
Cash flows from operating activities | ||||||
Net profit (loss) for the year | $ | $ (496) | |||||
Adjustments: | ||||||
Depreciation and amortization | $ | 637 | |||||
Loss from impairment of assets | $ | 612 | |||||
Share of loss of equity accounted investees | $ | 1 | |||||
Finance expenses, net | $ | 145 | |||||
Capital gain, net | $ | (3) | |||||
Income tax expenses | $ | (16) | |||||
Change in inventory | $ | (1) | |||||
Change in trade and other receivables | $ | 64 | |||||
Change in trade and other payables | $ | (38) | |||||
Changes in provisions | $ | 22 | |||||
Changes in employee benefits | $ | 130 | |||||
Change in other liabilities | $ | ||||||
Net income tax paid | $ | (125) | |||||
Net cash provided by operating activities | $ | 932 | |||||
Cash flows from investing activities | ||||||
Purchase of property, plant and equipment | $ | (324) | |||||
Investment in intangible assets and deferred expenses | $ | (104) | |||||
Proceeds from the sale of PP&E and investment property | $ | 84 | |||||
Tax payments due to owners' loans | $ | ||||||
Change in investments, net | $ | (312) | |||||
Net withdrawal from restricted cash | $ | ||||||
Tax payments regarding sale of investment property | $ | (53) | |||||
Other | $ | 11 | |||||
Net cash used in investing activities | $ | (698) | |||||
Cash flows from financing activities | ||||||
Proceeds from issuance of debentures and loans received | $ | 303 | |||||
Repayment of debentures and loans | $ | (478) | |||||
Interest paid | $ | (140) | |||||
Dividends paid by Bezeq to non- controlling interests | $ | (135) | |||||
Payments of principal and interest for leases | $ | (113) | |||||
Transactions with non-controlling interests | $ | ||||||
Dividends to shareholders | $ | ||||||
Payments to Eurocom DBS | $ | ||||||
Others | $ | (12) | |||||
Net cash used in financing Activities | $ | (575) | |||||
Net increase (decrease) in cash and cash equivalents | $ | (341) | |||||
Cash and cash equivalents as at the beginning of the year | $ | 636 | |||||
Cash and cash equivalents as at the end of the year | $ | $ 295 | |||||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
General
General | 12 Months Ended |
Dec. 31, 2018 | |
General | |
General | Note 1 - General A. Reporting Entity B Communications Ltd. ("the Company") is an Israeli resident company incorporated in Israel. The address of the Company's registered office is 2 Dov Friedman Street, Ramat-Gan, Israel. The consolidated financial statements of the Company as at and for the year ended December 31, 2018 include the accounts of the Company and its subsidiaries. The Company is a majority-owned subsidiary of Internet Gold - Golden Lines Ltd. ("IGLD" or "Internet Gold"). On April 14, 2010, the Company completed the acquisition of 30.44% of the outstanding shares of Bezeq - The Israel Telecommunications Corp. Limited ("Bezeq") and became the controlling shareholder of Bezeq. Bezeq's ordinary shares are registered for trade on the Tel Aviv Stock Exchange. On February 1, 2016, the Company sold 115,500,000 shares of Bezeq (4.18% of the outstanding shares of Bezeq) for NIS 8.5 per share or NIS 978, net of transaction costs. The Company retained a 26.34% ownership interest in Bezeq, following the closing of the transaction. For more information relating to the Company's control over Bezeq, see Note 12E. The ordinary shares of the Company are registered for trade on the NASDAQ Global Select Market and on the Tel Aviv Stock Exchange. B. Going concern Taking into consideration the following: (1) the financial and business events in the Bezeq Group, which led to a deterioration in the Company's financial position (mainly the impairment loss with respect to DBS as described in Note 9), including a possible violation of the covenants under the terms of the Company's outstanding debentures; (2) the decline in the prices of the Bezeq Group shares, which led, among other things, to the failure of the sale process of B Communications and/or the introduction of a strategic investor in B Communications in a manner that could enable the Company to service its liabilities and/or to provide sufficient financial support for B Communications; (3) the Company's decision to withhold payments to financial creditors at this stage; and (4) the process of dialogue with the bondholders of Internet Gold and B Communications in order to reach an arrangement and/or process for bringing an investor into the Group. In light of the above, the execution of a transaction for the sale of the Company's shares and/or the entry of a strategic investor into the Company and/or a refinance of the Company's debt, all in a manner that will be approved by the bond holders of the Company, will be required in order to enable the Company to continue its operations. At this stage and until such transaction enters into advanced stages and the regulatory approvals are granted, there is a substantial doubt about the Company's ability to continue as a going concern. Please also refer to Note 12D and 33D. C. Investigation of the Israel Securities Authority and the Police Force On June 20, 2017, the Israel Securities Authority ("the ISA") began an open investigation ("the Investigation"), which included searches at the offices of Bezeq and of DBS and seizure of documents. As part of the investigation, the former Chairman of Bezeq's Board of Directors was questioned, as well as Bezeq's former CEO, the former CEO and CFO of DBS, and to the best of Bezeq's knowledge, other senior officers and officers in Bezeq were questioned. On November 6, 2017, the ISA issued a press release regarding the conclusion of the Investigation and the transfer of the Investigation file to the Tel Aviv District Attorney (Taxation and Economics). In accordance with the notice, the ISA concluded that there is prima facie evidence establishing the involvement of the main suspects in the case, in offenses of: (1) fraudulently receiving funds in connection with the entitlement of Bezeq's former controlling shareholder to receive contingent consideration of NIS 170 as part of the transaction for Bezeq's purchase of DBS shares from such shareholder, which consideration was based on certain targets to be met by DBS; (2) leaking the material of the independent committee of Bezeq's Board of Directors that examined interested party transactions (the transaction for the acquisition of DBS shares by Bezeq and the transaction between DBS and Space Communications Ltd. for the purchase by DBS of satellite segments from Space Communications Ltd.) to Bezeq's former controlling shareholder and associates; and (3) promoting Bezeq's interests in the Ministry of Communications in violation of the Penal Law and the Israel Securities Law. The notice further stated that the Investigation file was transferred to the District Attorney's Office and that the District Attorney's Office is authorized to decide on how to proceed with this matter. It should be noted that in this context, on November 20, 2017, Bezeq and DBS received a "letter of notice to the suspect" indicating that the investigation file relating to Bezeq and DBS as suspects was transferred to the Attorney General for review. On February 18, 2018, the ISA and the Israel Police issued a joint press release stating that in view of the evidence the ISA found in its investigation, which raised suspicions of additional offenses, a new joint investigation was opened on that date by investigators of the ISA and the Unit for Combating Economic Crime at Lahav 433. Pursuant to such investigation, a number of suspects were arrested, including senior officers of Bezeq (including a former director and controlling shareholder in Bezeq and Bezeq's former CEO), and were subsequently released under restrictive conditions. On December 2, 2018, the spokespersons of the Israel Police and the ISA announced that the Investigation had been concluded ("the Announcement"). According to the announcement, the Investigation refers mainly to the alleged suspicion of bribery, fraud and breach of trust committed by the former controlling shareholder (at the times relevant to the Investigation), among others, in Bezeq and Walla website. With the conclusion of the Investigation, the Israel Police and the ISA Authority believe that there is sufficient evidence in the case to substantiate the suspicions against the main parties involved in the affair, some of whom are former officers of Bezeq (the former controlling shareholder of Bezeq, the former CEO of Bezeq, a former director in Bezeq, and the former VP of strategy and business development of Bezeq). It should be noted that on February 28, 2019, suspicions against Prime Minister Benjamin Netanyahu were published. The suspicions include reference to the matters investigated in the Investigation, including suspicions of exercising authority by Prime Minister Netanyahu to promote matters relating to the business of a former controlling shareholder in Bezeq and to his economic interests and the economic interests of Bezeq. In addition, as the Attorney General's decision indicates that the he is considering charging the former controlling shareholder in Bezeq with criminal charges for bribery, offenses of obstruction of justice and coerced testimony, money laundering offenses, and reporting violations under the Israel Securities Law. For further information about these proceedings, see Note 22. Bezeq does not have full information about the investigations, their scope, the materials or the evidence in the possession of the legal authorities. Accordingly, Bezeq is unable to assess the effects of the investigations, their findings, and their results on Bezeq, as well as on the financial statements, and on the estimates used in the preparation of these financial statements, if any. Once the constraints on carrying out reviews and controls related to issues that arose in the Investigations are lifted, the review of all matters related to subjects that arose during those Investigations will be completed as required. Following the special circumstances and the restrictions as described above and the restrictions that were specified, Bezeq performed compensatory actions, reviews and tests and procedures in order to ensure that its financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). In this respect, Bezeq, carried out the following actions, among others: 1. A special review of the adequacy of the control processes in Bezeq by outside consultants, led by Bezeq's Internal Auditor and under the supervision of a special, independent committee from among Bezeq's Board members. Further to this review, the special committee approved various amendments to the control processes and the work in Bezeq. The amendments have been implemented. 2. A special review of the issues of corporate governance led by Bezeq's Internal Auditor and supported by outside consultants. The work included deeper reviews on the issues of risk management, compliance, enforcement, and internal control. Bezeq and its subsidiaries are implementing the required adjustments according to the multi-annual guidelines decided upon. 3. Retaining the services of professional accounting support to assist the process of preparing the financial statements of DBS for 2017 and 2018. 4. Adding compensatory procedures in relation to the activities of certain officers on issues that affect financial reporting and disclosure, in order to deepen the internal control on those issues; these compensatory procedures were carried out in 2017 and 2018. 5. Changes in the composition of the Board of Directors and in the composition of the management of Bezeq and its subsidiaries. In 2017, as a consequence of the investigations of Bezeq and several of its directors and senior officers by both the ISA and Israel's Police, we attempted to assess these investigations through the scope of our own internal control over financial reporting. However, due to provisions of Israeli law concerning obstructing investigation proceedings both Bezeq and we were prevented from examining all matters known to us that were raised in the investigations and accordingly we are unable to fully assess the effects of the investigations on our financial statements and internal controls over financial reporting. Subject to these limitations, we identified a material weakness pertaining to the design of Bezeq's internal control over financial reporting relating to certain matters, which were mainly among the matters that were the subject of the investigations. Our management then assessed the effectiveness of our own internal control over financial reporting as of December 31, 2017. For the year end December 31, 2018 assessment, Bezeq undertook many steps to remediate their internal controls. At great expense, we undertook a comprehensive internal investigation and found no evidence of violations of the Foreign Corrupt Practices Act by our company. Our management believes that our then existing work process was adequate, that there were no material deficiencies in our controls and that the material weakness at Bezeq could not have been prevented by our company. Although we believe that there was no weaknesses in relation to the activity of our company, our Audit Committee engaged special legal counsel to assist us in designing and implementing certain prospective improvements to our existing internal processes and controls. We are continuing our efforts to strengthen our longstanding control processes. The procedures and controls, were improved, include training processes; working procedures with Bezeq's finance departments and financial managers; procedures for appointing directors to the board of directors of Bezeq; and procedures for working with Bezeq's internal enforcement team. In the light of various actions carried out to remedy the material weakness in Bezeq and based on an assessment of effectiveness carried out by Bezeq's management under the supervision of its Board of Directors, Bezeq's Board and Management came to the conclusion that the internal control on the financial statements and the disclosure of Bezeq as of December 31, 2018 was effective according to Israeli SOX which is different from US SOX. This conclusion is subject to the limitations arising from the investigations by the Israel Securities Authority and the Israel Police ("the Investigations"). Bezeq do not have complete information about the Investigations, their content, nor the material and evidence in the possession of the statutory authorities on this matter. Accordingly, Bezeq is unable to assess the effects of the investigations, their findings and their effect on it, on its financial statements and on the estimates used in the preparation of its financial statements, if any. D. Private Investigation by the SEC In March 2019, the Company was informed by Internet Gold of the issuance of a Formal Order of Private Investigation by the SEC of Internet Gold. The Formal Order authorizes an investigation of possible violations of the Foreign Corrupt Practices Act with respect to the facts uncovered in the criminal investigations in Israel. E. Definitions In these financial statements- (1) The Company: B Communications Ltd. (2) The Group: B Communications Ltd. and its subsidiaries, as listed in Note 12.A. (3) Parent company: Internet Gold - Golden Lines Ltd. (4) Bezeq: Bezeq - The Israel Telecommunication Corp. Limited. (5) Bezeq Group: Bezeq The Israel Telecommunication Corp. Limited and its subsidiaries, as listed in Note 12 A. (6) DBS: DBS Satellite Services (1998) Ltd. (7) Eurocom Communications: Eurocom Communications Ltd. (8) Subsidiaries: Companies whose financial statements are fully consolidated, directly or indirectly, with the financial statements of the Company. (9) Associates: Companies, in which the Group's investment is included, directly or indirectly, in the consolidated financial statements on an equity basis. (10) Investees: Subsidiaries or associates. (11) Related party: As defined in IAS 24 (2009), Related Party Disclosures. (12) Israeli CPI: The consumer price index as published by the Israeli Central Bureau of Statistics. |
Basis of Preparation
Basis of Preparation | 12 Months Ended |
Dec. 31, 2018 | |
Basis of Preparation [Abstract] | |
Basis of Preparation | Note 2 - Basis of Preparation A. Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board. The consolidated financial statements were authorized to be issued by the Company's Board of Directors on May 13, 2019. B. Functional currency and presentation currency The consolidated financial statements are presented in NIS, which is the Group's functional currency, and have been rounded to the nearest million. The NIS is the currency that represents the principal economic environment in which the Group operates. C. Convenience translation into U.S. dollars ("dollars" or "$") For the convenience of the reader, the reported NIS figures as at December 31, 2018, have been presented in dollars, translated at the representative rate of exchange as at December 31, 2018 (NIS 3.748 = US$ 1.00). The dollar amounts presented in these financial statements are merely supplementary information and should not be construed as complying with IFRS translation method or as representing amounts that are receivable or payable in dollars or convertible into dollars, unless otherwise indicated. D. Basis of measurement The consolidated financial statements have been prepared on the historical cost basis except for the following items: * Financial instruments, including financial derivative instruments, measured at fair value recognized through profit or loss. * Inventories measured at the lower of cost and net realizable value. * Equity-accounted investments. * Deferred tax assets and liabilities. * Provisions. * Assets and liabilities for employee benefits. * Liabilities for payment of contingent consideration in a business combination. For further information regarding the measurement of these assets and liabilities see Note 3 regarding significant accounting policies. The methods used to measure fair value are specified in Note 19E. E. Operating cycle The Group's operating cycle is up to one year. As a result, current assets and current liabilities include items the realization of which is intended and anticipated to take place within one year from the date of the financial statements. F. Classification of expenses recognized in the statement of income Costs and expenses in the statement of income are presented and analyzed on the basis of the function of the expenses. The classification is compatible with the understanding of the Group's businesses, which address a wide range of services using common infrastructure. All of the costs and expenses are used to provide services. G. Use of estimates and judgments The preparation of financial statements in conformity with IFRS requires the Group's managements to make judgments and use estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Significant estimates and judgments made when applying accounting policies and changes in these estimates and assumptions that could potentially have a material effect on the financial statements are as follows: Subject Principal assumptions Possible effects Reference Measurement of recoverable amounts of cash-generating units that include goodwill Assumption of expected cash flows from cash-generating units Recognition of impairment loss Note 9 Identification of a cash-generating unit to assess impairment Determining cash-generating units in the Group Recognition of impairment loss Note 9 Deferred taxes Assumption of anticipated future realization of the tax benefit, including assumptions for the utilization of carryforward losses in DBS, and the assumption that it is more likely than not that the cancellation of the structural separation between the Company and DBS will be approved. Recognition or reversal of deferred tax asset in profit or loss Note 21 Useful life and expected operation of fixed assets, intangible assets, broadcasting rights, and subscriber acquisition asset Assumptions of the useful life of groups of fixed assets, intangible assets, and additional assets Change in the value of fixed assets, intangible assets, additional assets, and depreciation and amortization expenses Notes 8, 9, 10 and 11 Determining the lease term When determining the term of the lease, the Group takes into consideration the period in which the lease cannot be canceled, including options to extend that will probably be exercised and/or options to cancel that will probably not be exercised. An increase or decrease in the initial measurement of a right-of-use asset and a lease liability and in depreciation and financing expenses in subsequent periods Note 14 Discount rate for a lease liability The Group capitalizes lease payments using its incremental interest rate An increase or decrease in the lease liability, right-of-use asset, and depreciation expenses and financing expenses to be recognized Note 14 Uncertain tax positions The extent of the certainty that the Group's tax positions will be accepted (uncertain tax positions) and the risk of it incurring any additional tax and interest expenses. This is based on an analysis of a number of matters including interpretations of tax laws and the Group's past experience Recognition or reversal of income tax expenses Note 21 Unavoidable costs of a contract Assuming that the economic benefits will exceed the unavoidable costs of the contract Recognition of a provision for an onerous contract Note 3.13.3 Subject Principal assumptions Possible effects Reference Measurement of liabilities and the fair value of the excess of advance payments for contingent consideration in a business combination The assumptions regarding the amount expected to be recovered for the Company from the excess of the advance payments, and taking into consideration the solvency of Eurocom DBS Change in the value of the liability for contingent consideration for a business combination, change in the fair value of the excess of the advance payments for contingent consideration and recognition in the statement of income for this change, respectively. Note 12 Non-recognition of profit from the sale of the Sakia property Expected collection of proceeds due to the Company for the sale of the property Recognition of capital gain from the sale of the property Note 13 Provisions and contingent liabilities Assessment of the likelihood of claims against Group companies and measuring potential liabilities attributable to claims Reversal or creation of a provision for a claim, recognition of income/expenses and recognition of profit or loss for such change, respectively Note 17 and Note 22 Employee post-employment benefits and liabilities for employees for dismissal Actuarial assumptions such as discount rate, future salary increases and churn rate An increase or decrease in the liability for a post-employment benefit plan and an obligation for voluntary redundancy of employees transferred from the Ministry of Communications Note 20 The existence of effective control over Bezeq The practical ability to appoint most of the members of the board of directors of Bezeq, as a result of the control permit in Bezeq, the composition and distribution of the holdings of the other shareholders of Bezeq and the restrictions on these shareholders under the Telecommunications Law Consolidation of Bezeq's reports or treatment of Bezeq using the equity method. Note 12E H. Determination of fair value When preparing the financial statements, the Group is required to determine the fair value of certain assets and liabilities. Further information about the assumptions made in determining fair values is disclosed in Note 19E regarding fair value. I. Initial application of new standards 1. Initial application of IFRS 16, Leases A. As from January 1, 2018 ("the Initial Application Date"), the Group has early adopted IFRS 16, Leases ("IFRS 16" or "the Standard"). The main effect of early adoption of IFRS 16 is reflected in annulment of the existing requirement from lessees to classify leases as operating (off-balance sheet) or finance leases and the presentation of a unified model for the accounting treatment of all leases according to the accounting treatment of finance leases in the previous accounting standard on leases, IAS 17. Accordingly, until the Initial Application Date, the Group classified most of the leases in which it is the lessee as operating leases, since it did not substantially bear all the risks and rewards from the assets. In accordance with IFRS 16, for agreements in which the Group is the lessee, the Group applies a unified accounting model, by which it recognizes a right-of-use asset and a lease liability at the inception of the lease contract for all the leases in which the Group has a right to control identified assets for a specified period of time. Accordingly, the Group recognizes depreciation and amortization expenses in respect of a right-of-use asset, examines the right-of-use asset for impairment in accordance with IAS 36, Impairment of Assets, and recognizes financing expenses on the lease liability. Therefore, as from the Initial Application Date, lease expenses relating to assets leased under an operating lease, which were presented as part of general and administrative expenses in the income statement, are recognized as assets that are depreciated in the depreciation and amortization expense item. The Group applies IFRS 16 using the cumulative effect approach without a restatement of comparative figures. In respect of all the leases under which the Group leases assets, the Group has elected to apply the transitional provision of recognizing a lease liability at the Initial Application Date according to the present value of the future lease payments discounted at the incremental interest rate of the lessee at that date (calculated according to the average duration of the balance of the lease period as from the Initial Application Date) and concurrently recognizing a right-of-use asset at the same amount of the liability, adjusted for any prepaid or accrued lease payments that were recognized as an asset or liability before the Initial Application Date. Therefore, application of IFRS 16 did not have an effect on the balance of the Group's equity and retained earnings at the Initial Application Date. Upon initial application, the Group also elected to apply the following expedients, as permitted by the IFRS 16: 1. Relying on a previous assessment of whether an arrangement is a lease or contains a lease at the application date of IFRS 16. Accordingly, the agreements that were previously classified as operating leases are accounted for in accordance with the new standard, and the agreements that were previously classified as service contracts continue to be accounted for as such without change. 2. Applying a single discount rate to a portfolio of leases with similar characteristics. 3. Not separating non-lease components from the lease components and accounting for all the components as a single lease component. 4. Relying on a previous assessment of whether a contract is onerous in accordance with IAS 37 at the transition date, as an alternative to assessing the impairment of right-of-use assets. 5. Excluding initial direct costs from the measurement of the right-of-use asset at the date of initial application. 6. Using hindsight in determining the lease period if the contract includes options to extend or cancel the lease. B. At the Initial Application Date of IFRS 16, the Group recognized right-of-use assets and lease liabilities in the amount of NIS 1.5 billion. In measurement of the lease liabilities, the Group discounted lease payments using the nominal incremental borrowing rate at January 1, 2018. The discount rates used to measure lease liabilities range between 1.3% and 3.6% (weighted average of 1.5%). Discounted interest rates were calculated on the basis of the market value of the marketable debentures issued by the Company. To determine the discount interest for each period, the risk-free curve was adjusted according to the risk incorporated in the debentures issued by the Company. The range of interest is affected by differences in the lease term. The difference between the Group's agreements for the minimum contractual lease payments in the amount of NIS 1,020, as reported in Note 18.1 to the annual financial statements of 2017, and the lease liabilities recognized at the Initial Application Date of IFRS 16, amounting to NIS 1.5 billion, is mainly due to the options for extending the leases, which will most likely be exercised, which were not included in the reporting in Note 18.1 to the annual financial statements of 2017 and due to the fact that the amounts of the agreements were presented in nominal and not in discounted amounts. The tables below summarize the effects on the consolidated statement of financial position as at December 31, 2018 and on the consolidated statements of income and cash flows for 2018, assuming that the Group's previous policy regarding leases continued in that period. Effect on the consolidated statement of financial position as at December 31, 2018 In accordance with the previous policy Change In accordance with IFRS 16 NIS NIS NIS Other receivables 321 (52 ) 269 Property, plant and equipment 6,315 (2 ) 6,313 Intangible assets 4,228 (1 ) 4,227 Right-of-use assets - 1,504 1,504 Trade and other payables 1,791 (89 ) 1,702 Current lease rights liabilities - 445 445 Non-current lease rights liabilities - 1,106 1,106 Equity attributable to shareholders 232 (4 ) 228 Non-controlling interests 545 (9 ) 536 Effect on the consolidated statement of income for 2018 In accordance with the previous policy Change In accordance with IFRS 16 NIS NIS NIS General and operating expenses 3,806 (412 ) 3,394 Depreciation and amortization 1,988 399 2,387 Impairment losses 2,291 3 2,294 Operating loss (1,394 ) 10 (1,384 ) Financing expenses net 505 26 531 Loss after financing expenses (1,899 ) (16 ) (1,915 ) Loss before income tax (1,902 ) (16 ) (1,918 ) Income tax expenses (56 ) (3 ) (59 ) Loss for the period (1,846 ) (13 ) (1,859 ) Loss attributable to shareholders of the company (1,025 ) (4 ) (1,029 ) Loss attribute to non-controlling interests (821 ) (9 ) (830 ) Effect on the consolidated statement of cash flows for 2018 In accordance with the previous policy Change In accordance with IFRS 16 NIS NIS NIS Net cash from operating activities 3,089 397 3,486 Net cash used in investing activities (2,643 ) 25 (2,618 ) Net cash used for financing activities (1,728 ) (422 ) (2,150 ) 2. Initial application of IFRS 9, Financial Instruments (2014) As from January 1, 2018, the Group applies IFRS 9, Financial Instruments, which replaces IAS 39, Financial Instruments: Recognition and Measurement. The new standard includes revised guidance on the classification and measurement of financial instruments, a new 'expected credit loss' model for calculating impairment for most financial assets, and new guidance and requirements with respect to hedge accounting. Initial application of the Standard did not have a material quantitative effect on the Group's financial statements. 3. Initial application of IFRS 15, Revenue from Contracts with Customers As from January 1, 2017, the Group has early adopted IFRS 15, Revenue from Contracts with Customers ("IFRS 15"), which sets out guidelines for recognition of revenue. The Group applied IFRS 15 using the cumulative effect approach without a restatement of comparative figures. Other than the accounting treatment of Subscriber Acquisition costs, implementation of IFRS 15 had no other material effects on the financial statements. In addition, implementation of IFRS 15 had no effect on retained earnings as at the transition date. The tables below summarize the effects on the consolidated statement of financial position as at December 31, 2017 and on the consolidated statements of income and cash flows for 2017, assuming that the Group's previous policy regarding subscriber acquisition costs continued during that period. Effect on the consolidated statement of financial position of the Group as at December 31, 2017: In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS Net subscriber acquisition asset (stated as deferred expenses and non-current investments) 4 111 115 Equity attributable to shareholders of the Company 1,224 22 1,246 Non-controlling interests 1,778 62 1,840 Total equity 3,002 84 3,086 Effect on the consolidated cash flows statement of the Group for 2017: Year ended December 31, 2017 In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS Net cash from operating activities 3,322 165 3,487 Net cash used in investing activities (963 ) (165 ) (1,128 ) Effect on the consolidated statement of income of the Group for 2017: Year ended December 31, 2017 In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS General and operating expenses 4,037 (131 ) 3,906 Salaries 2,041 (34 ) 2,007 Depreciation and amortization expenses 2,063 54 2,117 Operating profit 1,499 111 1,610 Profit after financing expenses 982 111 1,093 Profit before income tax 977 111 1,088 Income tax 320 27 347 Net profit for the period 657 84 741 Profit attributable to shareholders of the Company 56 22 78 Profit attributable to non-controlling interests 601 62 663 Earnings per share (Basic and Diluted) 1.88 0.74 2.62 |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 3 – Significant accounting policies The accounting policies set out below have been applied consistently for all periods presented in these consolidated financial statements, and have been applied consistently by Group entities, except as explained in Note 2, Basis of Preparation, under section I, Initial application of accounting standards. In this Note, where the Group has chosen accounting alternatives permitted in accounting standards and/or in accounting policy where there is no explicit provision in accounting standards, such disclosure is presented in bold. This does not attribute greater importance compared to other accounting policies that are not presented in bold. 3.1 Consolidation of the financial statements 3.1.1 Subsidiaries Subsidiaries are entities controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date of loss of control. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the acquire and it has the ability to affect those returns through its power over the acquire. Substantive rights held by the group and others are considering when assessing control. 3.1.2 Transactions eliminated on consolidation Intra-group balances and income and expenses arising from intra-group transactions, are eliminated in the consolidated statements. 3.1.3 Contingent consideration for business combinations Subsequent to the acquisition date, the Group recognizes changes in fair value of contingent consideration recognized under business combinations, classified as a financial liability in the statement of income under financing expenses. 3.1.4 Non-controlling interests According to the Group's accounting policy with respect to transactions with non-controlling interests, while retaining control, the difference between the consideration paid or received for change in non-controlling interests is recognized in retained earnings. 3.1.5 Allocation of impairment loss to non-controlling interests If an impairment loss allocated to non-controlling interests relates to goodwill that was not recognized in the consolidated financial statements, the impairment is not recognized as an impairment loss on goodwill. In such cases, only an impairment loss relating to goodwill that was allocated to the owners of the Company is recognized as an impairment loss on goodwill. For purposes of goodwill impairment testing, when the non-controlling interests are initially measured according to their relative share of the acquiree's net identifiable assets, the carrying amount of the goodwill is adjusted according to the share which the Group holds in the cash-generating unit to which the goodwill is allocated. 3.2 Foreign currency transactions Transactions in foreign currency are translated into the functional currency of the Group at the exchange rate on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies on the reporting date are retranslated to the functional currency at the exchange rate at that date. 3.3 Financial instruments 3.3.1 As from January 1, 2018, the Group applies IFRS 9, Financial Instruments ("IFRS 9"). The application of IFRS 9 did not have a material effect on the measurement of the Group's financial instruments in 2018, compared to the provisions in the previous standard, and the main effect of application of IFRS 9 in the Group is the use of the expected credit loss model. 3.3.2 Non-derivative financial assets Non-derivative financial assets comprise mainly investments in deposits, trade and other receivables, and cash and cash equivalents. The Group initially recognizes financial assets at the date at which the Group becomes a party to contractual provisions of the instrument, meaning the date that the Group undertakes to buy or sell the asset. A financial asset is initially measured at fair value plus transaction costs that are directly attributable to the acquisition or issuance of the financial asset. A trade receivable without a significant financing component is initially measured at the transaction price. Financial assets are derecognized when the contractual rights of the Group to the cash flows from the asset expire, or the Group transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Classification of financial assets into categories and the accounting treatment in each category Financial assets are classified at initial recognition to one of the following measurement categories: amortized cost; or fair value through profit or loss. A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated at fair value through profit or loss: A. It is held within a business model whose objective is to hold assets so as to collect contractual cash flows. B. The contractual terms of the financial asset give rise to cash flows representing solely payments of principal and interest on the principal amount outstanding on specified dates. All financial assets of the Group that are not classified as measured at amortized cost are measured at fair value through profit or loss. The Group classifies its financial assets as follows: Cash and cash equivalents Cash comprises cash balances available for immediate use and call deposits. Cash equivalents comprise short-term highly liquid investments (with original maturities of three months or less) that are readily convertible into known amounts of cash and are exposed to insignificant risks of change in value. Trade and other receivables and deposits The Group has balances of trade and other receivables and deposits that are held within a business model whose objective is collecting contractual cash flows. The contractual cash flows of these financial assets solely represent payments of principal and interest that reflects consideration for the time value of money and the credit risk. Accordingly, these financial assets are measured at amortized cost. Subsequent measurement and gains and losses Financial assets at amortized cost are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss. Financial assets at fair value through profit or loss are subsequently measured at fair value. Net gains and losses, including any interest income or dividend income, are recognized in profit or loss. 3.3.3 Non-derivative financial liabilities Non-derivative financial liabilities include debentures issued by the Group, loans and borrowings from banks and other credit providers, and trade and other payables. The Group initially recognizes debt instruments as they are incurred. Financial liabilities are recognized initially at fair value less any attributable transactions costs. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. Financial liabilities are derecognized when the obligation of the Group, as specified in the agreement, expires or when it is discharged or canceled. Change in terms of debt instruments An exchange of debt instruments having substantially different terms, between an existing borrower and lender are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability at fair value. The entire difference between the amortized cost of the original financial liability and the fair value of the new financial liability is recognized in profit or loss as a financing income or expense. The terms are substantially different if the discounted present value of the cash flows according to the new terms, including any commissions paid, less any commissions received and discounted using the original effective interest rate, is different by at least ten percent from the discounted present value of the remaining cash flows of the original financial liability. 3.3.4 CPI-linked assets and liabilities that are not measured at fair value The value of CPI-linked financial assets and liabilities, which are not measured at fair value, is revaluated in each period according to the actual increase in the CPI. 3.3.5 Offsetting financial instruments Financial assets and liabilities are offset, and the net amount presented in the statement of financial position when, and only when, the Group currently has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. 3.3.6 Hedge accounting The Group holds derivative financial instruments to hedge cash flows for risks to future changes in the CPI in respect of the debentures issued by the Group. At the inception of the hedging relationship, the Group documents its risk management objective and its hedging strategy. The Group also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and the hedging instrument are expected to offset each other. Derivatives are recognized initially at fair value. Attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and the effective portion of changes in fair value of the hedging instrument is recognized in a hedge reserve under other comprehensive income. The effective portion of changes in fair value of a derivative, recognized in other comprehensive income, is limited to the cumulative change in fair value of the hedged item (based on present value), from inception of the hedge. The change in fair value in respect of the ineffective portion is recognized immediately in profit or loss. 3.3.7 Economic hedges In addition, the Group holds derivative financial instruments to hedge cash flows for foreign currency risks. Hedge accounting is not applied for these instruments. The derivative instruments are recognized at fair value; changes in fair value are recognized in profit and loss as incurred, as a financing income or expense 3.3.8 Share capital a. Ordinary shares Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity. b. Treasury shares When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is carried to share premium. 3.4 Broadcasting rights Broadcasting rights are stated at cost, net of rights exercised and impairment losses. The costs of broadcasting rights acquired for the broadcasting of content include the amounts paid to the rights provider, plus direct costs for adjusting the rights to the broadcast. Broadcast rights are amortized in accordance with the actual broadcasts of the total number of expected broadcasts based on the management's estimate or broadcasts permitted under the agreement (the part that is unamortized at the end of the agreement term is amortized in full upon its termination), or on a straight line basis in accordance with the term of the rights agreement or the economic life, whichever is shorter. Broadcasting rights are assessed for impairment as part of the cash-generating unit to which the broadcasting rights are attributed. The net adjustment of the broadcasting rights is presented as an adjustment of earnings as part of the ongoing operations in the statements of cash flows. 3.5 Property, plant and equipment 3.5.1 Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labor and financing costs as well as any other cost directly attributable to bringing the asset to the condition for its use intended by the management, and the estimated costs of dismantling and removing the items and restoring the site on which they are located when the Group has an obligation to vacate and restore the site. The cost of purchased software that is integral to the functionality of the related equipment is recognized as part of the cost of the equipment. Spare parts, servicing equipment and stand-by equipment are classified as fixed assets when they meet the definition of fixed assets in IAS 16, and are otherwise to be classified as inventory. When major parts of the fixed assets have different useful lives, they are accounted for as separate items (major components) of the fixed assets. Gain or loss from the disposal of a fixed asset item is determined by comparing the proceeds from disposal of the asset with it carrying amount. Gain or loss from the sale of fixed assets is recognized under other income or other expenses, as the case may be, in the statement of income. 3.5.2 Subsequent expenditure The cost of replacing part of a fixed asset item is recognized in the carrying amount of the item if it is probable that the future economic benefit embodied in the new item will flow to the Group and its cost can be measured reliably. The costs of day-to-day servicing are recognized in the statement of income as incurred. 3.5.3 Depreciation Depreciation is recognized in the statement of income on a straight-line basis over the estimated useful life of each part of a fixed asset item, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets under finance lease agreements are depreciated over the shorter of the lease term and their useful lives. An asset is depreciated when it is ready for use, meaning when it reaches the location and condition necessary for it to be capable of operating in the manner intended by management. Leasehold improvements are generally depreciated over the shorter of the lease term, including the extension option held by the Group and intended to be exercised and the useful life of the leasehold improvements. The estimated useful lives for the current period are as follows: Years Fixed line and international network equipment (switches, transmission, power) 4-12 Network 12-33 Subscriber equipment and installations 4-8 Equipment and infrastructure for multichannel television 3-15 Vehicles 6-7 Office and general equipment 5-10 Electronic equipment, computers and internal communication systems 3-7 Cellular network 4-10 Passive radio equipment at cellular network sites up to December 31, 2037 Buildings 25 Seabed cable 4-25 (mainly 25) Depreciation methods, useful lives and residual values are reviewed at least at each reporting year and adjusted as required. 3.6 Intangible assets (1) Goodwill and brand names Goodwill and brand names that arise upon the acquisition of subsidiaries are included in intangible assets. Subsequent to initial recognition, brand name (Bezeq CGU, Bezeq International CGU and Pelephone CGU) and goodwill are measured at cost less accumulated impairment losses. Goodwill and brand names are measured at least once a year to assess impairment. (2) Software development costs Software development costs are recognized as an intangible asset only if the development costs can be measured reliably; the software is technically and commercially feasible; and the Group has sufficient resources to complete the development and intends to use the software. The costs recognized as an intangible asset include the cost of the materials, direct labor and overhead expenses directly attributable to preparation of the asset for its intended use. Other development costs are recognized in the statement of income as incurred. Capitalized development costs are measured at cost less amortization and accumulated impairment losses. ( 3) Software Software that is an integral part of the hardware, which cannot function without the programs installed on it, is classified as property, plant and equipment. However, licenses for stand-alone software, which adds functionality to the hardware, is classified (mainly) as intangible assets. (4) Rights to frequencies Rights to frequencies refer to frequencies assigned to Pelephone for cellular activities, after it won the dedicated tenders of the Ministry of Communications. Depreciation of the asset is recognized in the statement of income on the straight-line method over the term of the allocation of frequencies, which started from the use of the frequencies. The 4G frequencies (LTE) and 3G frequencies (UMTS/HSEA) are amortized until August 22, 2028. (5) Other intangible assets Other intangible assets acquired by the Group, which have a definite useful life, are measured at cost less amortization and accumulated impairment losses. (6) Subsequent expenditures Subsequent expenditures are recognized as intangible assets only when they increase the future economic benefits embodied in the specific asset to which they relate. All other expenditures, including expenditures relating to generated goodwill and brands, are recognized in the statement of income as incurred. (7) Amortization Amortization, except for goodwill, brand names (excluding brands acquired in the DBS business combination) and customer relationships, is recognized in the statement of income on a straight-line basis over the estimated useful life of the intangible assets, from the date on which the assets are available for use. Goodwill and brand names are not systematically amortized but are tested for impairment at least once a year. Customer relationships are amortized according to the economic benefit expected from those customers each period based on their expected churn rate, which results in accelerated amortization during the early years of the relationship. Estimated useful lives for the current and comparative periods are as follows: Type of asset Amortization period Frequency usage rights Over the term of the license up to 2028 Computer programs and software licenses 3 - 10 years according to the term of the license or the estimated time of use of the software Customer relationships 5 - 7 years based on the estimated customer churn rate (using the accelerated depreciation method) Brand acquired in a business combination 12 Amortization methods and useful lives are reviewed at least once a year and adjusted if appropriate. 3.7 Leased assets 3.7.1 As set out in Note 2.I.1 above, as from January 1, 2018, the Group early applies IFRS 16, Leases. 3.7.2 Accounting policy applied in the periods prior to January 1, 2018 Leases, including leases of land from the Israel Land Administration, where the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are measured at cost less accumulated amortization and impairment losses. Other leases are classified as operating leases and the leased assets are not recognized in the Group's statement of financial position. Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease. At inception or upon reassessment of an arrangement, the Group determines whether such an arrangement is or contains a lease. An arrangement is a lease or contains a lease if the following two criteria are met: A. The fulfillment of the arrangement is dependent on the use of a specific asset or assets. B. The arrangement contains rights to use the asset. If, in accordance with these terms, the Group determines that the agreement does not contain a lease, the agreement is accounted for as a service agreement and payments for the service are recognized in profit or loss on a straight-line basis, over the service period. 3.7.3 Accounting policy applied as from January 1, 2018 Presented below are the principal accounting policies for leases in which the Group is the lessee, which were applied as from January 1, 2018 following the application of the Standard: 3.7.4 Determining whether an arrangement contains a lease At the inception of the arrangement, the Group determines whether the arrangement is or contains a lease and examines whether the arrangement transfers the right to control the use of an identifiable asset for a period of time in return for payment. When assessing whether the arrangement transfers control over the use of an identifiable asset, the Group estimates, over the lease term, whether it has both rights set out below: A. The right to essentially obtain all the economic rewards associated with the use of the identifiable asset. B. The right to direct the use of the identifiable asset. For lease contracts that include non-lease components, such as services or maintenance, which are related to a lease component, the Group elected to account for the contract as a single lease component without separating the components. Leased assets and lease liability Contracts that award the Group the right to control the use of an identifiable asset over a period of time for a consideration are accounted for as leases. At initial recognition, the Group recognizes a liability at the present value of the future minimum lease payments (these payments do not include variable lease payments that are not linked to the CPI, or to any change in the rate of interest, or any change in the exchange rate), and concurrently, the Group recognizes a right-of-use asset at the amount of the liability, adjusted for lease payments paid in advance or accrued, plus direct costs incurred in the lease. Since the interest rate implicit in the lease is not readily determinable, the incremental borrowing rate of the Group is used (the borrowing rate that the Group would be required to pay to borrow the amounts required to obtain an asset at a similar value to the right-of-use asset in a similar economic environment, in a similar period and with similar collateral). Subsequent to initial recognition, the asset is accounted for using the cost model and it is amortized over the lease term or the useful life of the asset (whichever is earlier). The lease terms The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option if it is reasonably certain that the Group will exercise or not exercise the option. Variable lease payments Variable lease payments that are linked to the CPI are initially measured using the index or currency rate at the inception of the lease and are included in the measurement of the lease liability. When there is a change in the cash flows of the future lease payments arising from the change in the index, the liability is adjusted against the right-of-use asset. Depreciation of a right-of-use asset After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation and accumulated impairment losses and is adjusted for re-measurements of the lease liability. Depreciation is calculated on a straight-line basis over the useful life or contractual lease period, whichever earlier, as follows: Type of asset Weighted average of depreciation period as at January 1, 2018 (years) Cellular communications sites 6.5 Buildings 7 Vehicles 2 Subleases In leases in which the Group sublets the underlying asset, the Group assesses the classification of the sublease as a finance or operating lease, for the right-of-use received in the primary lease. The Group assessed the existing subleases on the initial application date, in accordance with the balance of their contractual terms as at that date. 3.8 Investment property Investment property is measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the investment property. 3.9 Right of use of capacities Transactions for acquiring an indefeasible right of use of submarine communication cable capacities are mostly accounted for as service transactions. The prepaid expense is amortized on a straight-line basis as stated in the agreement, but for no longer than the expected estimated useful life of those capacities. Identifiable capacities which serve the Bezeq Group exclusively meet the definition of a finance lease and are recognized in property, plant and equipment. The asset is depreciated on a straight-line basis as stated in the agreement, but for no longer than the expected estimated useful life of those capacities. 3.10 Inventory The cost of inventories includes the cost of purchase and cost incurred in bringing the inventories to their present location and condition. Inventories are measured at the lower of cost or net realizable value. The Group elected to base the cost of inventories on the moving average principle. The inventories include terminal equipment and accessories intended for sale and service, as well as spare parts used for repairs in the repair service provided to its customers. Slow-moving inventory of terminal equipment, accessories and spare parts are stated net of the provision for impairment. 3.11 Impairment 3.11.1 Non-derivative financial assets As set out in section 3.3 above, as from January 1, 2018, the Group applies IFRS 9, Financial Instruments ("IFRS 9") and performs an assessment for any indications of impairment in accordance with IFRS 9. As set out in Note 2.I.2, in practice, application of the New Standard did not have a material effect on the measurement of impairment of the Group's financial assets in 2018 compared with the previous standard. The Group has elected to measure the provision for expected credit losses in respect of trade receivables at an amount equal to the full lifetime credit losses of the instrument. Lifetime expected credit losses are expected credit losses that result from all possible default events over the expected life of the financial instrument. Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive. Expected credit losses for receivables in significant amounts are tested individually. Other financial assets are assessed for expected credit losses collectively in groups that share similar credit risk characteristics, taking into account past experience. The provision for expected credit losses is recognized net of the gross carrying amount of the receivables. For bank deposits, for which credit risk did not increase significantly from the date of initial recognition, the Group measures the provision for expected credit losses in an amount equal to the expected credit losses in respect of an event of default in a 12 month period. When determining whether the credit risk of a financial asset has increased significantly since initial recognition, and when estimating expected credit losses, the Group considers reasonable and supportable information that is relevant and available with no undue cost or effort. Such information includes quantitative and qualitative information, and an analysis, based on the Group's past experience and informed credit assessment, and it includes forward looking information. 3.11.2 Non-financial assets Timing of impairment testing The carrying amounts of the Group's non-financial assets, other than inventory and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the recoverable amount of the asset is estimated. The Group assesses the recoverable amount of goodwill and brand name once a year, or more frequently if there are indications of impairment. Measurement of recoverable amount The recoverable amount of an asset or cash-generating unit is the greater of its value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit, for which the estimated future cash flows from the asset or cash-generating unit (for which future cash flows were not adjusted). Determining cash-generating units For the purpose of impairment testing, the assets are grouped together into the smallest group of assets that generates cash from continuing use that are largely independent of other assets or groups of assets ("cash-generating unit"), see Note 9. Allocation of goodwill to cash-generating units For purposes of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes, but in any event is not larger than an operating segment. Goodwill acquired in a business combination is allocated to cash-generating units that are expected to generate benefits from the synergies of the combination. Recognition of impairment loss An impairment loss is recognized if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. As regards cash-generating units that include goodwill, an impairment loss is recognized when the carrying amount of the cash-generating unit, after including the balance of goodwill, exceeds its recoverable amount. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the cash-generating unit on a pro rata basis. To allocate an impairment loss, the assets are not impaired below the higher of their fair value less exercise costs and their value in use (if determinable) or zero. See Note 12. 3.12 Employee benefits 3.12.1 Post-employment benefits The Group has a number of post-employment benefit plans. The plans are usually financed by deposits with insurance companies and they are classified as defined contribution plans and defined benefit plans. A. Defined contribution plans A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. The Group's obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in the statement of income in the periods during which services are rendered by employees. B. Defined benefit plans The Group's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is presented at its present value, and the fair value of any plan assets is deducted. The calculation is performed annually by a qualified actuary. The discount rate is the yield at the reporting date on high-quality linked corporate debentures denominated in NIS, with maturity dates approximating the terms of the Group's obligations. Net interest costs on a defined benefit plan are calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability. The Group elected to recognize the interest costs that were recognized in profit or loss under financing expenses. Remeasurement of the net defined benefit liability comprises actuarial gains and losses and the return on plan assets (excluding interest). Remeasurements are recognized immediately directly in retained earnings When the benefits of a plan are improved or curtailed, the portion of the increased benefit relating to past service by employees or t |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 4 - Segment Reporting The Group operates in four segments in the communications sector and every company in the Group operates in a separate business segment. The primary reporting format, by business segments, is based on the Group’s management and internal reporting structure. Each company provides services in the segment in which it operates, using the property, plant and equipment and the infrastructure it owns (see also Note 26). The infrastructure of each company is used only for providing its services. Each of the companies in the Group is exposed to different risks and yield expectations, mainly with respect to the technology and competition in the segment in which it operates. Accordingly, the separable components in the Group are each company in the Group. Based on the above, the business segments of the Group are as follows: - Bezeq - The Israel Telecommunication Corp. Ltd.: fixed line domestic communications - Pelephone Communications Ltd.: cellular communications - Bezeq International Ltd.: international communications, internet services and network end point - DBS Satellite Services (1998) Ltd.: multichannel television The other companies in the Group are presented under the “Other” item. Other operations include call center services (Bezeq Online) and online shopping and classified ads (through Walla). These operations are not reported as reporting segments as they do not fulfill the quantitative thresholds. Inter-segment pricing is set at the price determined in a transaction in the ordinary course of business. The results, assets and liabilities of a segment include items directly attributable to that segment, as well as those that can be allocated on a reasonable basis. The results of the segments are presented net of the impairment losses described in Note 9. This is in accordance with the manner in which the Group’s chief operating decision maker evaluates the performance of the segment and makes decisions regarding the allocation of resources to the segment. Segment capital expenditure is the total cost incurred during the period for acquisition of property, plant and equipment and intangible assets. Year ended December 31, 2016 Domestic fixed–line communications Cellular communications International communications and Internet services Multi-channel television Others Adjustments Consolidated NIS NIS NIS NIS NIS NIS NIS Revenue from external entities 4,063 2,587 1,478 1,745 198 - 10,071 Inter-segment revenues 320 43 70 - 20 (440 ) 13 Total revenue 4,383 2,630 1,548 1,745 218 (440 ) 10,084 Depreciation and amortization 717 380 137 296 16 615 2,161 Segment results - operating income 2,076 32 176 264 (34 ) (648 ) 1,866 Finance income 30 52 5 13 4 19 123 Finance expenses (475 ) (6 ) (15 ) (539 ) (2 ) (17 ) (1,054 ) Total financing income (expense), net (445 ) 46 (10 ) (526 ) 2 2 (931 ) Segment profit (loss) after finance expenses, net 1,631 78 166 (262 ) (32 ) (646 ) 935 Share in profit (loss) of equity-accounted investee - - 1 - (5 ) (1 ) (5 ) Segment profit (loss) before income tax 1,631 78 167 (262 ) (37 ) (647 ) 930 Income tax 399 17 42 (330 ) - 314 442 Segment results - net profit (loss) 1,232 61 125 68 (37 ) (961 ) 488 Additional information: Segment assets 7,111 3,294 1,177 2,026 193 3,260 17,061 Goodwill - - 6 - 10 3,050 3,066 Investment in equity-accounted investee - - 5 - 1 12 18 Segment liabilities 11,988 569 380 1,434 104 2,369 16,844 Investments in property, plant and equipment and intangible assets 828 277 126 227 13 - 1,471 Year ended December 31, 2017 Domestic fixed–line communications Cellular communications International communications and Internet services Multi-channel television Others Adjustments Consolidated NIS NIS NIS NIS NIS NIS NIS Revenue from external entities 3,953 2,500 1,466 1,650 220 - 9,789 Inter-segment revenues 291 46 71 - 17 (425 ) - Total revenue 4,244 2,546 1,537 1,650 237 (425 ) 9,789 Depreciation and amortization 728 383 135 285 20 566 2,117 Segment results - operating income 1,971 72 174 163 (20 ) (750 ) 1,610 Finance income 36 54 4 10 5 (40 ) 69 Finance expenses (439 ) (3 ) (12 ) (81 ) - (51 ) (586 ) Total financing income (expense), net (403 ) 51 (8 ) (71 ) 5 (91 ) (517 ) Segment profit (loss) after finance expenses, net 1,568 123 166 92 (15 ) (841 ) 1,093 Share in profit (loss) of equity-accounted investee - - - - (4 ) (1 ) (5 ) Segment profit (loss) before income tax 1,568 123 166 92 (19 ) (842 ) 1,088 Income tax 396 28 39 336 - (452 ) 347 Segment results - net profit (loss) 1,172 95 127 (244 ) (19 ) (390 ) 741 Additional information: Segment assets 9,086 3,271 1,199 1,502 174 2,460 17,692 Goodwill - - 6 - 10 2,921 2,937 Investment in equity-accounted investee - - 5 - (6 ) 11 10 Segment liabilities 13,901 536 410 1,154 64 1,488 17,553 Investments in property, plant and equipment and intangible assets 851 331 169 237 19 - 1,607 Year ended December 31, 2018 Domestic fixed–line communications Cellular communications International communications and Internet services Multi-channel television Others Adjustments* Consolidated NIS NIS NIS NIS NIS NIS NIS Revenue from external entities 3,883 2,401 1,338 1,473 226 - 9,321 Inter-segment revenues 313 42 53 - 15 (423 ) - Total revenue 4,196 2,443 1,391 1,473 241 (423 ) 9,321 Depreciation and amortization 850 655 194 323 21 345 2,388 Segment results - operating income 1,224 (2 ) 116 (56 ) (36 ) (2,630 ) (1,384 ) Finance income 32 56 1 27 - (27 ) 89 Finance expenses (502 ) (22 ) (16 ) (16 ) - (64 ) (620 ) Total financing income (expense), net (470 ) 34 (15 ) 11 - (91 ) (531 ) Segment profit (loss) after finance expenses, net 754 32 101 (45 ) (36 ) (2,721 ) (1,915 ) Share in profit (loss) of equity-accounted investee - - 1 - (4 ) - (3 ) Segment profit (loss) before income tax 754 32 102 (45 ) (40 ) (2,721 ) (1,918 ) Income tax 187 8 25 3 - (282 ) (59 ) Segment results - net profit (loss) 567 24 77 (48 ) (40 ) (2,439 ) (1,859 ) Additional information: Segment assets 8,896 4,124 1,332 1,606 157 971 17,086 Goodwill - - 6 - - 2,274 2,280 Investment in equity-accounted investee - - 6 - 3 - 9 Segment liabilities 14,284 1,425 567 687 84 1,564 18,611 Investments in property, plant and equipment and intangible assets 902 346 137 318 13 - 1,716 * The results of the multi-channel television segment, the cellular communications segment and the International communications and internet services segments are presented net of the impairment losses set out in Note 9. These impairment losses are presented as part of the adjustments. B. Adjustments for segment reporting of revenue, profit or loss, assets and liabilities Year ended December 31, 2016 2017 2018 NIS NIS NIS Revenue Revenue from reporting segments 10,306 9,977 9,503 Revenue from other segments 218 237 241 Elimination of revenue from inter-segment sales except for revenue from sales to an associate reporting as a segment (440 ) (425 ) (423 ) Consolidated revenue 10,084 9,789 9,321 Year ended December 31, 2016 2017 2018 NIS NIS NIS Profit or loss Operating income for reporting segments 2,548 2,380 1,282 Financing expenses, net (931 ) (517 ) (531 ) Share in the losses (profit) of equity-accounted investees (5 ) (5 ) (3 ) Profit (loss) from operations classified in other categories (34 ) (20 ) (36 ) Depreciation and amortization of intangible assets resulting from the Bezeq PPA adjustments (635 ) (733 ) (975 ) Loss from impairment of assets (see Note 9) - - (1,638 ) Other adjustments (13 ) (17 ) (17 ) Consolidated profit (loss) before income tax 930 1,088 (1,918 ) December 31, 2017 2018 NIS NIS Assets Assets from reporting segments 15,069 15,970 Assets attributable to operations in other categories 178 159 Goodwill not attributable to segment assets 2,921 2,274 Loss from impairment of assets - (1,638 ) PPA not attributable to reporting segment 1,636 1,166 Assets resulting from the Bezeq PPA, net 1,678 1,477 Assets attributable to a non-reportable segment (843 ) (33 ) Consolidated assets 20,639 19,375 December 31, 2017 2018 NIS NIS Liabilities Liabilities from reporting segments 16,001 16,963 Liabilities attributable to operations in other categories 64 84 Inter-segment liabilities (1,360 ) (1,158 ) Liabilities resulting from the Bezeq PPA, net 386 247 Liabilities attributable to a non-reportable segment 2,462 2,475 Consolidated liabilities 17,553 18,611 |
Cash and Cash Equivalents
Cash and Cash Equivalents | 12 Months Ended |
Dec. 31, 2018 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | Note 5 - Cash and Cash Equivalents As of December 31, 2017, and December 31, 2018, cash and cash equivalents include mainly bank deposits with a maturity of up to 90 days. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2018 | |
Investments Including Derivatives [Abstract] | |
Investments | Note 6 - Investments December 31, 2017 2018 NIS NIS Current investments Investments in marketable securities at fair value through profit and loss and others 321 396 Bank deposits 275 1,384 596 1,780 The deposits are repayable until December 2019 and the other investments can be disposed of immediately. |
Trade and Other Receivables
Trade and Other Receivables | 12 Months Ended |
Dec. 31, 2018 | |
Trade and other receivables [abstract] | |
Trade and Other Receivables | Note 7 - Trade and Other Receivables A. Composition of trade and other receivables December 31, 2017 2018 NIS NIS Trade receivables, net* Outstanding debts 765 709 Credit cards and checks receivable 428 396 Unbilled receivables 235 237 Current maturities of long-term receivables 472 420 Related parties 15 11 Total trade receivables 1,915 1,773 Other receivables and current tax assets Prepaid expenses 66 34 Current tax assets 2 104 Other receivables (mainly from real estate sales) 202 131 Total other receivables 270 269 Long-term trade and other receivables Trade receivables- open debts* (1) 387 339 Long term receivables (from real estate sales) 106 131 493 470 2,678 2,512 * The amount of trade receivables is stated net of the provision for doubtful debts. (1) Discounted interest rates for long-term trade receivables are based the estimated credit risk of trade receivables. The discounted interest rates used by the Bezeq Group in 2018 are 3.4% - 4.6% (in 2017: 3.4% - 3.5%). B. Excepted payment dates for long-term trade and other receivables: December 31, 2018 NIS 2020 329 2021 90 2022 and thereafter 51 470 C. Change in provision for doubtful debts during the year December 31, 2017 2018 NIS NIS Balance at January 1 111 92 Impaired loss recognized 20 23 Bad debts (39 ) (28 ) Balance at December 31 92 87 D. Aging of trade receivables The aging of trade receivables at the reporting date was as follow: December 31, 2017 December 31, 2018 Gross Impairment Gross Impairment NIS NIS NIS NIS Not past due 2,153 (6 ) 1,971 (5 ) Past due up to one year 165 (37 ) 151 (34 ) Past due one to two years 44 (27 ) 38 (16 ) Past due more than two years 32 (22 ) 39 (32 ) 2,394 (92 ) 2,199 (87 ) |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of detailed information about property, plant and equipment [abstract] | |
Property, Plant and Equipment | Note 8 - Property, Plant and Equipment Switching Transmission, Multi- Office power, channel equipment, Cellular, equipment computers Land and And satellite Network and Subscriber and buildings equipment equipment infrastructure equipment vehicles Total NIS NIS NIS NIS NIS NIS NIS Cost Balance as at January 1, 2017 1,051 5,457 5,740 1,036 1,464 1,003 15,751 Additions 34 408 228 165 278 75 1,188 Disposals (81 ) - - (1 ) (4 ) (2 ) (88 ) Balance as at December 31, 2017 1,004 5,865 5,968 1,200 1,738 1,076 16,851 Balance as at January 1, 2018 1,004 5,865 5,968 1,200 1,738 1,076 16,851 Additions 22 396 213 247 311 86 1,275 Disposals (2 ) - - (1 ) (15 ) (9 ) (27 ) Transfer to Investment property (22 ) - - - - - (22 ) Balance as at December 31, 2018 1,002 6,261 6,181 1,446 2,034 1,153 18,077 Depreciation and impairment losses Balance as at January 1, 2017 402 3,472 2,736 369 953 747 8,679 Depreciation for the year 53 481 204 222 187 85 1,232 Balance as at December 31, 2017 455 3,953 2,940 591 1,140 832 9,911 Balance as at January 1, 2018 455 3,953 2,940 591 1,140 832 9,911 Depreciation for the year 73 481 210 214 215 84 1,277 Loss from impairment of assets 22 - - 526 - 28 576 Balance as at December 31, 2018 550 4,434 3,150 1,331 1,355 944 11,764 Carrying amounts As at January 1, 2017 649 1,985 3,004 667 511 256 7,072 As at December 31, 2017 549 1,912 3,028 609 598 244 6,940 As at December 31, 2018 452 1,827 3,031 115 679 209 6,313 A. The residual value of the Bezeq’s copper cables is assessed at the end of each quarter. The residual value is NIS 168 as at December 31, 2018 and NIS 188 as at December 31, 2017. B. Fixed assets in the Bezeq Group are derecognized at the end of each year upon reaching full depreciation, except for land, buildings, vehicles, copper cables and specific components for Pelephone’s UMTS network, which are derecognized upon their sale. In 2018, the Bezeq Group derecognized fully depreciated property at a cost of NIS 537 (in 2017, NIS 496). C. The Bezeq Group companies reviewed the useful life of the fixed assets through the depreciation committee, in order to determine the estimated useful life of their equipment. The change is not expected to have a material impact on the depreciation expenses of the Bezeq Group. Following the findings of the depreciation committees, minor changes were made in the estimated useful life of certain assets. D. Most of the real estate assets used by the Bezeq Group are leased under a capitalized lease from the Israel Lands Administration as from 1993 for 49 years, with an option for an extension of another 49 years. Lease rights are amortized over the term of the lease period. E. In 2013, Bezeq started to install a fiber optic network that will reach subscribers’ homes. In 2017, deployment of the fibers reached the state required for operation when a decision is made on the technology to be used, and Bezeq began to amortize the network. Commercial operation of the network is expected in the future. F. In accordance with the Telecommunications Order (Telecommunications and Broadcasts) (Determination of Essential Service Provided by Bezeq The Israel Telecommunication Corp. Ltd.), 1997, approval from the Prime Minister and Minister of Communications is required to confer rights in some of the Company’s assets (including switches, cable network, transmission network, and information and databases). G. For agreements for purchasing fixed assets please refer to Note 23G. H. For information about pledges see Note 24. I. For information about pledges on loans and borrowings, see Note 15. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Intangible assets and goodwill [abstract] | |
Intangible Assets | Note 9 - Intangible Assets A. Composition Customer Computer Right of use relationships software in cellular and Goodwill and licenses frequencies brand names Others Total NIS NIS NIS NIS NIS NIS Cost Balance as at January 1, 2017 3,066 1,779 480 7,479 269 13,073 Acquisitions or additions from independent development - 227 - - - 227 Disposals - - - - (48 ) (48 ) Balance as at December 31, 2017 3,066 2,006 480 7,479 221 13,252 Balance as at January 1, 2018 3,066 2,006 480 7,479 221 13,252 Acquisitions or additions from independent development - 220 - - - 220 Disposals - (12 ) - - - (12 ) Balance as at December 31, 2018 3,066 2,214 480 7,479 221 13,460 Amortization and impairment losses Balance as at January 1, 2017 - 1,238 242 4,826 233 6,539 Amortization for the year - 218 29 530 9 786 Disposals - - - - (42 ) (42 ) Impairment losses 129 - - - - 129 Balance as at December 31, 2017 129 1,456 271 5,356 200 7,412 Balance as at January 1, 2018 129 1,456 271 5,356 200 7,412 Amortization for the year - 226 20 290 6 542 Impairment losses 659 104 - 505 11 1,279 Balance as at December 31, 2018 788 1,786 291 6,151 217 9,233 Carrying amounts As at January 1, 2017 3,066 541 238 2,653 36 6,534 As at December 31, 2017 2,937 550 209 2,123 21 5,840 As at December 31, 2018 2,278 428 189 1,328 4 4,227 B. Total value of goodwill attributable to each cash-generating unit: December 31 2017 2018 NIS NIS Domestic fixed-line communications 1,548 1,548 Cellular communications 1,163 685 Multi-channel television 33 - International communications and internet services 181 40 Walla communications 7 - Others 5 5 Total 2,937 2,278 C. Goodwill impairment testing For the purpose of impairment testing, goodwill is allocated to the Group’s cash generating units (“CGU”) which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. Several goodwill balances result from the requirement to recognize a deferred tax liability on business combination, calculated as the tax effect on the difference between the fair value of the acquired assets and liabilities, and their tax bases. For the purpose of testing this goodwill for impairment, any of the related deferred tax liabilities recognized on acquisition that remain at the balance sheet date are treated as part of the carrying amount of the relevant CGU. The annual impairment test date is December 31. The recoverable amount of each CGU was calculated as the highest between its value in use and its fair value which was based on the Discounted Cash Flow method under the Income Approach. Domestic fixed-line communications (Bezeq Fixed Line) - The fair value (level 3) of the domestic fixed line cash-generating unit of the Bezeq Group was calculated by discounting future cash flows (DCF) based on a five-year cash flow forecast as at the end of the current period with the addition of the salvage value. The cash flow forecast is based, among other things, on Bezeq’s performance in recent years and assessments regarding the expected trends in the fixed-line market in the coming years (the level of competition, retail and wholesale price levels, regulation aspects, and technological developments). Main assumptions underlying the forecast: (1) the continued decrease in revenue from telephony (the decrease in the number of lines and erosion of average revenue per line); (2) the relative stability in medium-term revenue from internet, and the return to a direction of long-term growth (in line with market growth and based on high rates); and (3) increase in revenue from data communication and transmission, cloud and digital. Operating expenses, sales, marketing, and investments were adjusted to the scope of activity in the segment and in general, this includes discount forecasts regarding gradual retrenchment in the Company’s human resources and severance expenses and the resulting salary expenses. The nominal capital price taken into account for the valuation is 7.75% (after tax). In addition, a permanent growth rate of 1% was assumed. The valuation was prepared by an external appraiser. Based on the valuation described above, the Group was not required to record amortization for impairment of a domestic fixed-line communications cash-generating unit. Cellular communications (Pelephone) – During the second quarter of 2018 the Company assessed the recoverable amount of the cellular communications CGU due to impairment signs. According to the valuation assessed during the second quarter the Company recognized an impairment loss of NIS 333 attributable to shareholders. The impairment loss was fully attributed to goodwill and was included under impairment losses in the statement of income. As of December 31, 2018, the fair value (level 3) of the cellular communications cash-generating unit of the Bezeq Group was calculated by discounting future cash flows (DCF) based on a five-year cash flow forecast as at the end of the current period with the addition of the salvage value. The cash flow forecast is based, among other things, on Pelephone’s performance in recent years and assessments regarding the expected trends in the cellular market in the coming years (the level of competition, price level, regulation, and technological developments). The main assumption underlying the forecast is that competition in the market will continue with high intensity in the short term and that stability and a certain increase will occur in the medium to long term. The revenue forecast is based on assumptions regarding the number of Pelephone subscribers, average revenue per user, and sales of terminal equipment. The forecast of expenses and investments is based, among other things, on assumptions regarding the number of Pelephone employees and the resulting salary expenses, while the other operating expenses and investments were adjusted to the projected volume of operations of Pelephone. The nominal capital price taken into account for the valuation is 9.25% (after tax). In addition, a permanent growth rate of 3% was assumed. The valuation was prepared by an external appraiser. Based on the above valuation, the carrying amount of the cellular telephone CGU is NIS 476 higher than its recoverable amount of NIS 5,342 (which includes rights of use asset as a result of implementing IFRS 16). Consequently, an impairment loss of NIS 145 attributable to shareholders was recognized. Due to the impairment of the CGU, the recoverable amount is the same as the carrying amount. The impairment loss was fully attributed to goodwill and was included under impairment losses in the statement of income. The circumstances that led to the recognition of an impairment loss are the lower revenues resulted from a lower ARPU forecast as a result of the price competition in the cellular market. The forecast also assumes a lower decrease in the expenses of the cellular telephone CGU, as a result of efficiency measures taken by management, however, it does not fully compensate for the expected decrease in the CGU’s revenues. Multi-channel television (DBS) The value in use of the multi-channel television cash-generating unit of the Bezeq Group was calculated by discounting future cash flows (DCF) based on the eight-year cash flow forecast of DBS as at the end of the current period with the addition of the value arising from the representative year. The forecast period was chosen so that the representative year is the year following the estimated date for completion of the planned migration for internet-based broadcasting instead of satellite, as set out below. The nominal capital price taken into account for the valuation is 8.5% (after tax). In addition, a permanent growth rate of 0% was assumed. The cash flow forecast was based, among other things, on the performance of DBS in recent years and assessments of the expected trends in the television market for the years ahead, including technology development, consumer preferences, competitors and the level of competition, price levels and regulatory obligations. The main assumption underlying the forecast is that the relevant future technology will be interactive and two-way, and that a satellite product cannot compete with the IP product (television broadcasts over the internet) over time, due to the growing gap in customer experience. As a result, the multi-year forecast reflects a plan for gradual migration (from satellite broadcasts to OTT internet streaming), and accordingly, assumptions include a gradual replacement of satellite converters with IP converters, upgrade of the broadcasting infrastructure, construction of a support system for customer service, and adaptation of content contracts for OTT broadcasts. As set out above, the forecast period reflects the period of migration from satellite broadcasts to OTT broadcasts, until complete discontinuation of satellite broadcasts. These circumstances, together with expectations for the continuation of intense competition throughout the forecast period and the relatively rigid expenditure structure, resulted in a forecast of significant operational losses and a significant negative cash flows in the coming years, and a low negative cash flow, close to a balance, is expected at the end of the forecast period in the technology and business model of DBS. It should be noted that the plan will be implemented together with an ongoing assessment of market conditions, competition, and the technological environment, and the adjustments that will be required as a result. The valuation was prepared by an external appraiser. Based on the valuation as described above, the total value of the operations of DBS is negative, amounting to NIS 871. In view of the negative value of the operations, the value of the non-current assets of DBS was determined as the higher of their fair value and zero. Based on the assessment of the fair value of the non-current assets of DBS, the carrying amount of the depreciable assets (including customer relations and branding attributable to DBS in the business combination) is NIS 1,638 higher than their fair value less disposal costs. Accordingly, the Group recognized an impairment loss of NIS 1,638 in the multi-channel television cash-generating unit (after writing off the tax reserve for customer relations and branding in the amount of NIS 1,524). The impairment loss was attributed to fixed assets, broadcast rights, intangible assets, and subscriber acquisition assets, as set out below, and was included in the impairment loss item in the statement of income. Attribution of impairment loss to Group assets: NIS Broadcasting rights, net of rights exercised 403 Fixed assets 559 Intangible assets 106 Subscriber acquisition (assessed under IFRS 15) 29 Rights of use for leased assets 3 Total impairment recognized in the statements of DBS 1,100 Customer relations and branding 505 Goodwill 33 Total impairment loss of assets 1,638 Write-off of deferred tax attributed to customer relations and branding (114 ) Total impairment loss of multi-channel television cash-generating unit after tax 1,524 Below is information about the Group’s method for measuring the fair value of the assets of DBS, which were impaired as set out above: Broadcasting rights Property, plants and equipment Intangible assets Rights of use for leased assets International communications and Internet services (Bezeq International) - The fair value (level 3) of the international communications, internet and NEP services cash-generating unit for Bezeq Group was calculated by discounting future cash flows (DCF) based on a five-year cash flow forecast as at the end of the current period with the addition of the salvage value. The cash flow forecast is based, among other things, on Bezeq International’s performance in recent years and assessments regarding the expected trends in the markets in which it operates in the coming years (the level of competition, price level, regulation, and technological developments). The revenue forecast is based on assumptions regarding the number of Bezeq International internet subscribers and the average revenue per subscriber, Bezeq International’s operations in the international communications market, and its development in communications solutions for businesses. Operating expenses and level of investments were adjusted to the forecasted scope of Bezeq International’s operations The nominal capital price taken into account for the valuation is 10.25% (after tax). In addition, a permanent growth rate of 3% was assumed. The valuation was prepared by an external appraiser. Based on the above valuation, the carrying amount of the cellular telephone CGU is NIS 461 higher than its recoverable amount of NIS 1,200 (which includes rights of use asset as a result of implementing IFRS 16). Consequently, an impairment loss of NIS 140 attributable to shareholders was recognized. Due to the impairment of the CGU, the recoverable amount is the same as the carrying amount. The impairment loss was fully attributed to goodwill and was included under impairment losses in the statement of income. The circumstances that led to the recognition of an impairment loss are the lower revenues resulted from the fierce competition in the Internet Service Provider market along with the wholesale market and lower revenues from the International Long-Distance market. The forecast also assumes a lower decrease in the expenses of the CGU, as a result of efficiency measures taken by management, however, it does not fully compensate for the expected decrease in the CGU’s revenues. Walla Communications (Walla) - Due to the increasing competition in online advertising, Walla adjusted its forecasts for the coming years. As a result, Walla estimated the recoverable amount of Walla as a cash-generating unit as at December 31, 2018. The value in use of Walla was calculated by discounting future cash flows (DCF) based on a five-year cash flow forecast as at the end of the current period. The cash flow forecast is based, among other things, on Walla’s performance in recent years and assessments regarding the expected trends in the online advertising market (the number of players, level of competition, and price level). The main assumption underlying the forecast is that competition in the market will continue with high intensity and will affect mainly the revenues forecast, and the operating, selling, marketing, and investment expenses were adjusted to the volume of activity of the Company. Since the expected cash flow for 2019-2023 is negative, the value in use is close to zero. Consequently, an impairment loss of NIS 37 was recognized. The impairment loss was attributed to goodwill, fixed assets, intangible assets, and broadcasting rights and is included in under impairment losses in the statement of income. |
Deferred Expenses and Non-Curre
Deferred Expenses and Non-Current Investments | 12 Months Ended |
Dec. 31, 2018 | |
Deferred Expenses and Non-Current Investments [Abstract] | |
Deferred Expenses and Non-Current Investments | Note 10 - Deferred Expenses and Non-Current Investments December 31 2017 2018 NIS NIS Deferred expenses (A) 314 270 Customer acquisition asset, net (D) 115 142 Deposit used as collateral against hedging transactions (B) 67 41 Bank deposit for loans to Company employees (C) 51 48 Investments in equity-accounted investee 11 8 558 509 A. For its operations, Bezeq International acquires indefeasible rights of use (“IRU”) from Mediterranean Nautilus (Israel) Ltd. for the acquisition of seabed cable capacities, which are accounted for as service transactions. Under the contract, Bezeq International has the right of use of the capacities until 2022 with an option for an extension until 2027. The amount of the prepaid expense is amortized on a straight line until 2027. The balance of the liability for the agreement with Mediterranean Nautilus is US$ 13.1. B. A deposit used as collateral for hedging transactions is payable in December 2020. C. A bank deposit for loans to Company employees without a repayment date. D. Subscriber acquisition assets: Subscriber acquisition assets NIS Cost Balance as at January 1, 2017 49 Additions 165 Disposals (18 ) Balance as at December 31, 2017 196 Additions 164 Disposals (27 ) Balance as at December 31, 2018 333 Amortization and impairment losses Balance as at January 1, 2017 42 Depreciation 57 Disposals (18 ) Balance as at December 31, 2017 81 Depreciation 108 Disposals (27 ) Impairment loss 29 Balance as at December 31, 2018 191 Carrying amount As at January 1, 2018 115 As at December 31, 2018 142 |
Broadcasting Rights, Net of Rig
Broadcasting Rights, Net of Rights Exercised | 12 Months Ended |
Dec. 31, 2018 | |
Broadcast Rights, Net of Rights Exercised [Abstract] | |
Broadcasting Rights, Net of Rights Exercised | Note 11 - Broadcasting Rights, Net of Rights Exercised December 31 2017 2018 NIS NIS Cost 797 1,010 Less rights exercised (343 ) (547 ) Impairment loss (see Note 9) - (403 ) Total 454 60 For further information about the Group’s agreements for acquisition of broadcasting rights, see Note 23, Agreements. |
Investees
Investees | 12 Months Ended |
Dec. 31, 2018 | |
Investees [Abstract] | |
Investees | Note 12 - Investees A. Material subsidiaries held directly and indirectly by the Company 1. General Principal location of the company’s Ownership activity interest B Communications (SP1) Ltd. and B Communications (SP2) Ltd. (1) Israel 100 % Bezeq - The Israel Telecommunication Corp. Limited Israel 26.34 % Subsidiaries of Bezeq - The Israel Telecommunication Corp. Limited Pelephone Communications Ltd. Israel 100 % Bezeq International Ltd. Israel 100 % DBS Israel 100 % Walla Communications Ltd. Israel 100 % (1) Held by B Communications (SP1) Ltd. 2. Details of Group entities a. B Communications (SP1) Ltd. and B Communications (SP2) Ltd. B Communications (SP1) Ltd. (“SP1”), founded in 2010, is a wholly-owned subsidiary of the Company. SP1 is the sole shareholder of B Communications (SP2) Ltd. (“SP2”) which directly holds the Bezeq controlling interest. b. Bezeq - The Israel Telecommunications Corporation Ltd. Bezeq is controlled by SP2 which holds 25.82% of Bezeq’s outstanding shares. An additional 0.52% of Bezeq outstanding shares are held by B Communications directly. Bezeq is the largest communications group in Israel. c. Pelephone Communications Ltd. Pelephone Communications Ltd. (“Pelephone”) is a wholly-owned subsidiary of Bezeq. Pelephone provides cellular communication services and value-added services and markets terminal equipment. d. Bezeq International Ltd. Bezeq International Ltd. (“Bezeq International”) is a wholly-owned subsidiary of Bezeq. Bezeq International provides internet access (ISP) services, international communications services and network end point (NEP) services. e. DBS Satellite Services (1998) Ltd. DBS Satellite Services (1998) Ltd. (“DBS”) is a wholly-owned subsidiary of Bezeq. DBS provides multi-channel television services. f. Walla Communications Ltd. Walla is wholly owned by Bezeq. Walla! provides internet, management and media services for a range of populations. 3. Dividend paid by Bezeq to non-controlling interests during 2018 was in the amount of NIS 505 (in 2017: NIS 948). 4. Bezeq’s Dividend Distribution Policy: On August 4, 2009, the Board of Directors of Bezeq approved a dividend distribution policy in which Bezeq will distribute a dividend to its shareholders amounting to 100% of the semi-annual profit (after tax) (profit for the period attributable to the shareholders of Bezeq), in accordance with the consolidated financial statements of Bezeq. On March 6, 2018, the Board of Directors of Bezeq resolved to revise the dividend distribution policy, such that Bezeq will distribute a dividend to its shareholders, on a semi-annual basis, of 70% of the semi-annual net profit in accordance with the consolidated financial statements of Bezeq, as from the next distribution following the resolution. On March 27, 2019, Bezeq’s Board of Directors resolved to cancel the Company’s dividend distribution policy. The resolution was passed after a presenting a clear and transparent position with the shareholders and under the circumstances that arose due to the inability to distribute a dividend due to the expected failure to meet the profit test in the next two years. Accordingly, the Board of Directors resolved that it would not be appropriate to maintain a dividend policy when in practice it is not effective. The cancellation of the policy will not prevent Bezeq’s Board of Directors from assessing, from time to time, the distribution of dividends to its shareholders, taking into consideration, among other things, the provisions of the law, the state of its business and its capital structure, while maintaining a balance between ensuring its financial strength and stability, including its debt level and credit rating, and the continued attribution of value to its shareholders through ongoing distribution of a dividend, all subject to the approval of the general meeting of its shareholders regarding each specific distribution, as set out in Bezeq’s articles of association. On May 10, 2018, Bezeq distributed a cash dividend of NIS 368, representing 70% of its net profit for the second half of 2017. The Company received NIS 97 as its share of the dividend distribution. On October 10, 2018, Bezeq distributed a cash dividend of NIS 318, representing 70% of its net profit for the first half of 2018. The Company received NIS 84 as its share of the dividend distribution. In 2016, 2017 and 2018, Bezeq declared and paid the following dividends in cash: 2016 2017 2018 NIS NIS NIS Distribution of a regular dividend NIS 0.25 per share - - 686 NIS 0.47 per share - 1,286 - NIS 0.52 per share 1,441 - - 5. On February 13, 2019, Bezeq’s Board of Directors approved the request of each of the subsidiaries Pelephone, Bezeq International and DBS to apply to the Ministry of Communications for approval to change the corporate structures according to which the full operations and assets of each of the subsidiaries will be transferred to a separate limited partnership, wholly-owned by Bezeq (Bezeq as a limited partnership and a company (separate and different in each partnership), wholly owned by Bezeq as a general partner). Bezeq’s Board of Directors also approved the Company’s application to the Tax Authority to approve the transfer of the subsidiaries’ operations to the partnerships as a tax-exempt transfer in accordance with the provisions of section 103 of the Income Tax Ordinance, and the request that the assessment agreement dated September 15, 2016, regarding the distribution of the losses of DBS (as described in Note 21) will also apply to the partnership into which it will merge. 6. On March 27, 2019, Bezeq’s Board of Directors approved the convening of a general meeting to approve an increase in Bezeq’s registered share capital by one billion shares of NIS 1 par value each, as a preliminary measure before potential capital raising in the amount of NIS 2 billion by issuing rights, subject to the decisions and approvals that are required (including approval in accordance with the Communications Order, receipt of the permits for the rights issue, and the decisions of the certified organs of Bezeq). On April 8, 2019, Bezeq reported that its Board of Directors decided that the matter of increasing its registered share capital will be removed from the agenda of the Meeting. B. DBS Satellite Services (1998) Ltd. 1. As at March 25, 2015, Bezeq held 49.78% of the share capital of DBS and it held options that confer the right to 8.6% in DBS shares, which Bezeq is unable to exercise. Eurocom DBS Ltd. held the balance of DBS shares. On March 25, 2015, Bezeq exercised the options that were allotted, for no consideration, and on June 24, 2016, Bezeq completed a transaction for the acquisition of the entire holdings of Eurocom DBS in DBS, and all of the owner’s loans provided by Eurocom to DBS (“the Acquisition Transaction”). On the completion date, Bezeq transferred the cash consideration of NIS 680 to Eurocom DBS for the Acquisition Transaction. Under the terms of the Acquisition Transaction, in addition to the cash consideration of NIS 680, the consideration included two additional contingent considerations, as follows: one additional consideration of up to NIS 200, which will be paid in accordance with the tax synergy according to the terms defined in the acquisition agreement (“the First Contingent Consideration”); and another additional consideration of up to NIS 170, which will be paid in accordance with the business results of DBS in the 2015-2017 (“the Second Contingent Consideration”). On completion of the Acquisition Transaction, DBS became a wholly owned subsidiary (100%) of Bezeq. Bezeq consolidates the financial statements of DBS as from March 23, 2015. In September 2016, Bezeq paid Eurocom DBS NIS 188 (plus interest differences of NIS 10) for the First Contingent Consideration, under the Assessment Agreement and taxation decision of the Tax Authority as set out in Note 21. On account of the Second Contingent Consideration, two payments of NIS 57 each were paid, one in 2016 and the other in 2017. In accordance with the financial results of DBS for 2017, due to the fact that the final amount of the Second Contingent Consideration was lower than the amount of advances that Bezeq paid Eurocom DBS for the consideration, Eurocom DBS is required to return the difference to Bezeq. On April 22, 2018, a liquidation order was issued for Eurocom Communications Ltd. which came into effect on May 3, 2018, and a liquidation order was issued for Eurocom DBS Ltd. According to Bezeq’s estimate as of December 31, 2018, taking into consideration the insolvency of Eurocom DBS, no repayment of the advances is expected. As a result, in 2018, financing expenses in the amount of NIS 43 were recognized for the elimination of the debt balance of the advance payments. 2. In February 2018, Bezeq converted the balance of the DBS debentures in the amount of NIS 422, which it held, to DBS capital. In addition, in 2018, the shareholders’ loan to DBS in the amount of NIS 97 was converted to DBS capital, and Bezeq invested an additional NIS 100 in the capital of DBS. 3. In 2018, DBS incurred an operating loss of NIS 1.15 billion (of which, NIS 1.1 billion was for an impairment loss for assets as set out in Note 9 above) and as at December 31, 2018, DBS had a working capital deficiency of NIS 355. According to the forecasts of DBS, it expects to continue to accumulate operational losses in the coming years and therefore will be unable to meet its obligations and continue operating as a going concern without Bezeq’s support. On February 13, 2019, Bezeq undertook to provide DBS with a credit facility or capital investments in the amount of NIS 250, upon which DBS can draw for a period of 15 months from that date. Insofar as the support is provided by way of credit, the repayment date of the credit will not be earlier than the end of the term of the credit facility. In March 2019, Bezeq invested NIS 70 in accordance with the letter of undertaking. The management of DBS believes that the financial resources at its disposal, will be adequate for the operations of DBS for the coming year. C. Non-controlling interests in subsidiaries The table hereunder presents summary information of the Group’s subsidiaries including fair value adjustments that were made on the date of acquisition, other than goodwill, in which there are non-controlling interests that are material to the Group. December 31, Rate of ownership interests Carrying held by amount of non- Non- Non- non- controlling Current current Current current Total net controlling interests assets assets liabilities liabilities assets interests % NIS 2018 Bezeq Group 73.66 4,431 11,892 4,433 11,456 434 482 2017 Bezeq Group 73.66 4,823 12,026 3,857 10,848 2,144 1,840 2016 Bezeq Group 73.66 3,559 13,083 3,966 10,270 2,406 2,131 Year ended December 31, Cash flow Total from comprehensive financing Profit Income activities Total (loss) (loss) without Dividend increase attributable attributable Cash flow Cash flow dividend to paid to (decrease) Other Total to non- to non- from from non- non- in cash Profit comprehensive comprehensive controlling controlling operating investing controlling controlling and cash Revenues (loss) Income (loss) Income (loss) interests interests activities activities interests interests equivalents NIS 2018 Bezeq Group 9,321 (1,859 ) 42 (1,817 ) (830 ) (799 ) 3,486 (2,618 ) (1,645 ) (505 ) (1,282 ) 2017 Bezeq Group 9,789 858 (8 ) 850 663 657 3,525 (1,148 ) 104 (948 ) 1,533 2016 Bezeq Group 10,084 989 (15 ) 974 724 713 3,526 (1,567 ) (804 ) (1,062 ) 93 D. Increasing Competition and Reducing Concentration, 2013 law In December 2013, the Knesset passed the Israeli Law for Increasing Competition and Reducing Concentration, 2013 (“Concentration Law”), which: (1) imposes limitations on the control over companies with publicly held debt or equity securities through a pyramidal ownership structure by imposing a limitation on the number of public companies (tiers) in such pyramidal structure; (2) authorizes financial regulators to set forth limitations on the amount of credit that financial institutions are permitted to provide to a corporation or a group of companies under the control of the same controlling shareholder; (3) imposes limitations on the holdings by a significant non-finance company in a significant finance company or the holdings of both kinds of companies under common control; and (4) requires governmental authorities responsible for the award of rights in public assets (including in the communications field) in certain cases to consider control concentration factors and industry-specific competitive factors. Internet Gold is deemed to be a “first tier” company, the Company is deemed to be a “second tier” company and Bezeq is deemed to be a “third-tier” company under the Concentration Law. Accordingly, if either Internet Gold or the Company is unable to redeem any of their publicly held debt and delist their ordinary shares from the TASE (which would require 90-days’ prior notice to the TASE) or go private prior to December 10, 2019, the Company will not be permitted to control Bezeq after such date and its holdings in Bezeq may be transferred to a trustee for the purpose of selling such holdings. The Concentration Law sets forth certain mechanisms intended to enable a tier company, which is subject to the prohibition of controlling another tier company, to make various arrangements for the repurchase of its publicly-held shares and the early redemption of publicly-held debt in order to comply with the provisions of the law. These mechanisms enable the repurchase of publicly-held shares and the early redemption of publicly-held debt securities under a Court-approved scheme of arrangement pursuant to the Israeli Companies Law, at fair value and in accordance with the conditions prescribed by the Concentration Law, while providing certain relief from shareholders or debenture holder majority requirements for the approval of the arrangement. Furthermore, if a trustee is appointed, he may seek a district court to order the cancellation of distributions made by Bezeq prior to his appointment if they are deemed not be in Bezeq’s interest. In addition, beginning six months after the publication of the Concentration Law and during a six years transition period, the board of directors of a company that is a “third-tier” company (such as Bezeq) must be comprised of a majority of “independent directors,” within the meaning of the Israeli Companies Law, and the number of “external directors” pursuant to the Israeli Companies Law shall be at least half the number of the company’s directors less one (rounded upwards) but not less than two. The election of such external directors will be by a majority vote of the shareholders and the controlling shareholder’s vote will not be counted for such purpose. The Israeli Minister of Justice is authorized to enact regulations setting forth a lower number of required external directors, provided that such number will not be lower than one-third of the board members. The Company is examining several alternatives on how to comply with the implementation of the provisions of the Concentration Law: 1. Over the last few weeks, an application has been made to the Ministry of Justice, whose goal is to establish a legal position according to which the Concentration Law does not apply to the current structure of companies (Internet Gold, B Communications and Bezeq). In the Company’s opinion, under the present situation, taking into consideration, inter alia, the legal status of Eurocom Communications, and in particular the appointment of the Liquidator and the special mangers on behalf of the Court in Eurocom Communications, the control group in Bezeq is no longer a “Pyramid holding”, which is prohibited under the provisions of the Concentration Law. In the Company’s opinion, since the entry of Eurocom Communications into the process of liquidation by a court and the appointment of the special mangers on behalf of the court, and as long as this is the legal status, Internet Gold is no longer considered a “first layer company” as this term is defined in the law. The purpose of the Concentration Law was to prevent a situation in which “Ultimate Controlling Shareholder” controls the structure of three public companies, but under the current situation, this situation no longer exists. These remarks regarding the structure of the companies are reinforced in the light of the current discussions and legal status with the holders of the Company’s debentures and the appointment of the representatives of the debenture holders due to the Companies Decision regarding the suspension of payments to the debenture holders at this stage. The Company’s request to the Ministry of Justice was made by a leading law firm. The Company and its consultants believe that the request has a well-established nature. 2. Both Internet Gold and B Communications received proposals reflecting a complete solution to the Concentration Law. The proposals were submitted by recognized entities. These proposals include options for resolving the concentration law by several alternative methods presented to the companies: A. Selling Internet Gold shares in B Communications, in a way that “disconnects a public layer”. B. Significant capital injection into B Communications, against the issuance of shares in a manner that creates a new controlling shareholder for B Communications, which is not a public company and does not constitute a “layer company” (which is prohibited by the Concentration Law). C. The replacement of existing public debt in Internet Gold, with private debt along with the delisting of its shares from trading on TASE in a manner that constitutes a full legal solution to the Concentration Law. In practice, all the alternatives will result in an updated corporate structure that resolves the Concentration Law issue through a new controlling shareholder who is not a public company. All the above alternatives are being intensively pursued by the companies and their debenture holders, with clear timetables for the process. No assurance can be given that such alternative solutions will be reached on a timely basis. In the event that a solution to the Concentration Law shall not be implemented until December 2019, a district court may appoint a trustee, who will be awarded the means of control (including voting rights and right to appoint directors) for the purpose of selling such means of control. The trustee shall act pursuant to the orders of the district court with respect to such means of control. The district court may, instead of appointing a trustee and under certain circumstances, order that the means of control held by the controlling shareholder shall not provide any rights whatsoever. Until the appointment of a trustee by the district court, the means of control shall not grant any voting rights. E. The Company’s control over Bezeq The Company has control over Bezeq based on the facts that it holds significantly more voting rights than any other shareholder. Bezeq’s other shareholders are widely dispersed and are not allowed to increase their holdings above 5% without regulatory approval, appoint a director or the chief executive officer of Bezeq nor have any influence on Bezeq’s day-to-day operational decision-making policies. In addition, the Israeli law and regulations were formulated in order to ensure that no individual or entity will interfere with the control of Bezeq by the holder of the Control Permit. These regulations enable the Company to nominate the majority of the board of directors of Bezeq. |
Investment Property
Investment Property | 12 Months Ended |
Dec. 31, 2018 | |
Investment property [abstract] | |
Investment Property | Note 13 - Investment Property On January 21, 2018, Bezeq signed an agreement for the sale of a real estate asset in Sakia ("the Sakia property") for a total consideration of NIS 497, plus VAT, which may increase up to NIS 550, if the purchaser, in accordance with its right under the agreement, postpones the date of payment of up to two thirds of the consideration until December 31, 2022. In 2018, Bezeq received a demand from the Israel Lands Authority ("the ILA") for payment of a permit fee for the asset betterment plan with respect to the Sakia property in the amount of NIS 148 and a demand from the local planning and building committee for betterment tax of NIS 143.5 for disposal of the property by way of a sale. Bezeq paid NIS 112 on account of the demand and deposited a bank guarantee in the amount of NIS 44 for the balance of the demand plus VAT. Bezeq filed an objection to the demand for the permit fees and filed an appeal against the demand for betterment tax. In addition, Bezeq sent the ILA a demand for full payment of the betterment tax in accordance with the ILA's undertaking in the settlement agreement. In January 2019, the ILA rejected all of Bezeq's arguments in the objection. If the mechanism for settling disputes set out in the settlement agreement with the ILA does not bring the dispute to an end, Bezeq will file a monetary claim petitioning the court to order the ILA to refund the permit fees paid by Bezeq and to order the ILA to pay the demand for the betterment tax. It should be noted that the amount for the permit fee to be determined at the end of the proceedings may also affect the amount of the betterment tax Bezeq will be required to pay to the Planning Committee. Bezeq believes that the amount of the permit fee and the betterment tax that it will be required to pay is expected to be low and possibly even lower than the total amount of the demands. The investment property balance includes Bezeq's estimate of the permit fees and the betterment tax that Bezeq will be required to pay at the end of the appeal proceedings. In December 2018, NIS 155 was paid to Bezeq on account of the transaction. Upon receipt of the funds, Bezeq undertook that if the buyer's request for a building permit for the property is not accepted by the local committee due to the betterment tax, Bezeq will pay the full amount of the tax or will reach another arrangement with the local committee, which will allow the receipt of the building permit. Bezeq is expected to record a capital gain on the date on which the conditions for recognition of the sale of the asset are fulfilled in accordance with accounting principles. If, on completion of the appeal proceedings, Bezeq is required to pay the full amount of the betterment tax and the permit fee, the capital gain will amount to NIS 250. For the completion of the sale of the Sakia property after the balance sheet date, please refer to Note 33F. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Leases | Note 14 - Leases As set out in Note 2.I.1, as from January 1, 2018, the Group early applies IFRS 16, Leases. Under the lease agreements, the Group leases mainly cellular communications sites, structures (including offices, warehouses, communication rooms, and points of sale), and vehicles. A. Right of use asset Communications sites Buildings Vehicles Total NIS NIS NIS NIS Cost Balance as at January 1, 2018 809 538 173 1,520 Additions for new agreements 159 15 146 320 Derecognition for terminated agreements (45 ) (9 ) (11 ) (65 ) Changes in agreements (mainly extension of the agreement periods) and revaluation 43 81 (22 ) 102 Balance as at December 31, 2018 966 625 286 1,877 Amortization and impairment losses Balance as at January 1, 2018 - - - - Amortization for the year 190 120 113 423 Derecognition for terminated agreements (18 ) (4 ) (9 ) (31 ) Changes in agreements and other (3 ) (1 ) (18 ) (22 ) Impairment loss - - 3 3 Balance as at December 31, 2018 169 115 89 373 Carrying amount Balance as at January 1, 2018 809 538 173 1,520 Balance as at December 31, 2018 797 510 197 1,504 B. Liability for a lease Communications sites Buildings Vehicles Total NIS NIS NIS NIS Balance as at January 1, 2018 809 538 188 1,535 Additions for new agreements 156 14 146 316 Disposals (27 ) (5 ) (2 ) (34 ) Changes in agreements (mainly extension of the agreement periods) and revaluation 48 87 (5 ) 130 Financing expenses for employee benefits 14 9 3 26 Payments for a lease (190 ) (124 ) (108 ) (422 ) Balance as at December 31, 2018 810 519 222 1,551 Carrying amount Current maturities of a lease liability 203 124 118 445 Long-term liabilities for a lease 607 395 104 1,106 Total balance as at December 31, 2018 810 519 222 1,551 3. Analysis of repayment dates of liabilities for the Group's lease (including principal and interest to be paid) Expected payment dates December 31, NIS Up to one year 446 1-5 years 852 More than five years 361 Total 1,659 4. Options to terminate or extend a lease In most of its leases, the Group assumed that it is reasonably certain that the extension option in the agreements will be exercised, therefore there are no material liabilities in respect of leases that were not presented in the financial statements. Most of the lease agreements include an option to cancel the agreement with notice and/or payment of a penalty as set out in the agreements. The Group assumed that it is reasonably certain that the cancellation options will not be exercised. 5. Information about material lease agreements not yet included in measurement of the lease liability In December 2018, Bezeq entered into an agreement to lease part of an office and commercial building. The agreement is for ten years and includes three option periods of up to 24 years and 8 months in the aggregate, as from January 1, 2021. The annual rent amounts to NIS 20. The right-of-use asset and liability for the lease will be recognized in the financial statements at the date ownership of the asset is transferred, which is expected to be in 2020. |
Debentures, Bank Loans and Cred
Debentures, Bank Loans and Credit | 12 Months Ended |
Dec. 31, 2018 | |
Debentures, Bank Loans and Credit [Abstract] | |
Debentures, Bank Loans and Credit | Note 15 - Debentures, Bank Loans and Credit A. Composition December 31 2017 2018 NIS NIS Current liabilities Current maturities of debentures 1,166 3,376 Current maturities of bank loans 692 621 1,858 3,997 Non-current liabilities Debentures 8,036 5,537 Bank loans 4,401 4,100 12,437 9,637 14,295 13,634 B. Debt terms and repayment schedule December 31, 2017 December 31, 2018 Nominal Carrying Carrying interest Par value amount Par value amount Currency rate NIS NIS NIS NIS % Loans from banks and others: Unlinked - Variable interest 675 675 500 500 NIS P-0.33 to P+0.2 Unlinked - Fixed interest 4,398 4,418 4,208 4,221 NIS 2.40 to 6.85 5,073 5,093 4,708 4,721 Debentures: Linked to the Israeli CPI - fixed interest 3,897 4, 091 3,290 3,464 NIS 2.20 to 8.40 Unlinked - variable interest 734 732 587 586 NIS Makam for one year + 1.4 Unlinked - fixed interest 4,347 4,379 4,811 4,863 NIS 3.60 to 6.65 8,978 9,202 8,688 8,913 Total interest-bearing liabilities 14,051 14,295 13,396 13,634 Debentures issues by the Group (1) On September 21, 2010, the Company issued NIS 400 of its Series B Debentures at par value to the public in Israel. In January 2012 and August 2013, the Company completed private placements of additional Series B Debentures in the amount of NIS 126 and NIS 180 par value, respectively, to certain Israeli institutional investors. On April 1, 2016, the Company completed a private placement of NIS 148 par value of its Series B Debentures to Israeli institutional investors for an aggregate consideration of NIS 162. As at December 31, 2018 the outstanding par value of the Series B Debentures was NIS 226. The Series B Debentures are denominated in NIS, bear interest at a fixed annual rate of 6.5% which is payable semi-annually on March 31 and September 30 of each of the years 2011 through 2019 (the first interest payment was made on March 31, 2011 and the last interest payment is payable on March 31, 2019). The principal of the Series B Debentures is payable in four equal installments on March 31 of each year starting from 2016. According to the financial covenants of the Series B Debentures the Company is obligated to the following: 1. Not issue any additional Series B Debentures if such increase will decrease the A2 rating of the Series B Debentures. 2. To maintain control of Bezeq. 3. The investors will have the right to require the immediate repayment of the Series B debentures if Eurocom will no longer hold the controlling interest in the Company. For debentures payments withholding after the balance sheet date please refer to Note 33D. (2) On February 19, 2014, the Company issued $800 of Senior Secured Notes (the "Notes") due 2021 that bear 7⅜% annual interest paid semi-annually. The Notes were offered and sold in the United States to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act") and to certain qualifying investors in offshore transactions, including in Israel, in reliance on Regulation S under the Securities Act. The Notes had senior obligations of the Company and were guaranteed by its two wholly-owned subsidiaries, SP1 and SP2, on a senior secured basis ("the Guarantees"). The Notes and the Guarantees were secured by first priority pledges over all of the capital stock of SP2, the capital stock of Bezeq held by SP2, and additional collateral. The Notes were admitted for trading on the system of the Tel Aviv Stock Exchange for trading by institutional investors, known as TACT Institutional. The Company used the net proceeds from the offering of the Notes to repay all amounts outstanding under the loans received by SP2 and SP1 from Bank Hapoalim Ltd. ("Bank Hapoalim") and Migdal Insurance and Financial Holdings Ltd. Group ("Migdal") that were used to purchase the controlling interest in Bezeq and to deposit funds into a debt service account. On August 10, 2014, the Company's Board of Directors approved the buyback of up to $50 of the Notes. On January 20, 2016, the Company completed its $50 repurchase program and its Board of Directors approved the extension and increase of the program by an additional $50. During 2015 and 2016, the Company purchased $65 par value of the Notes. On May 26, 2016, the Company announced that its wholly-owned subsidiary, B Communications (SP4) LP, had invited holders of the Notes to submit tenders to purchase their Notes for cash within a purchase price range of $1.00 to $1.07 per $1.00 nominal amount of Notes. The aggregate par value of the Notes tendered and purchased was approximately $18.6. The total loss incurred from the repurchase of the Notes during 2015 and 2016 amounted to NIS 33. In September 2016, the Notes were fully repaid following the Company's issuance of Series C Debentures, as detailed below in Note 15B(3). (3) On September 18, 2016, the Company issued, at par value, NIS 1.9 billion of Series C Debentures to the public in Israel. The principal of the Series C Debentures will be payable in four equal instalments payable on November 30 of each of the years 2020 through 2023 and one instalment payable on November 30, 2024. Each of the first four instalments will be equal to 7.5% of the principal amount of the aggregate amount of the Series C Debentures issued and the last instalment will equal to 70% of such principal amount. The annual coupon of the Series C Debentures is 3.6% and is denominated in NIS. The interest on the outstanding principal of the Series C Debentures is payable in semi-annual payments on May 31 and November 30 of each year. The net proceeds from the offering together with cash and cash equivalents of the Company were used to fully redeem the outstanding Notes and to deposit the interest payment in May 2017 into a trustee account solely for the benefit of the holders of the Series C Debentures. On January 16, 2017, the Company completed a private placement of NIS 118 par value of its Series C Debentures to Israeli institutional investors for consideration of NIS 118. On January 23, 2018, the Company completed a private placement of NIS 240 par value of its Series C Debentures to Israeli institutional investors for an aggregate consideration of NIS 249. As at December 31, 2018 the outstanding par value of Series C Debentures was NIS 2,240. Below are the main undertakings and covenants with respect to the Series C Debentures: The Company undertook to refrain from creating in favor of any third party a lien of any ranking whatsoever over its direct and/or indirect holdings of 691,361,036 shares of Bezeq, including any of the rights accompanying such shares (hereinafter, the "Undertaken Shares") without the prior consent of the holders of the Series C Debentures by a special resolution (hereinafter, "Negative Lien Undertaking"). The Company further undertook to refrain from making any disposition of the Undertaken Shares without the prior consent of the holders of the Series C Debentures by a special resolution. Notwithstanding the foregoing, and subject to the provisions of applicable law and/or permit, the Company may sell all or a portion of the Undertaken Shares to any third party, provided that in such instance, the Company uses the net proceeds it receives from such sale, less the taxes, expenses and deductions entailed in the sale of such shares, to make full or partial early redemption, of the Series C Debentures (exclusively) in accordance with the provisions of the Indenture. Restriction on assumption of additional debt: The Company undertook to refrain from assuming additional debt, with the exception of: a. Financial debt in an amount (principal) which does not exceed NIS 400; b. The financial debt is not secured by any collateral and does not have priority over Series C Debentures in creditor ranking upon insolvency. c. The total par value of the Series C Debentures together with the total principal amount of the additional debt together with the (principal) amount of the new debt which the Company intends to assume does not exceed an aggregate of NIS 2.3 billion. Control of Bezeq The Company undertook to hold (directly and/or indirectly) at least 25% of Bezeq's issued and paid-up capital, unless a regulatory permit/approval is received to reduce such shareholding percentage. Control of the Company Eurocom Communications, undertook to refrain from transferring control of the Company (directly or indirectly) to a party which has not been authorized in advance by the necessary regulatory entities, to the extent such approvals are required, at the relevant time. It should be noted that on April 22, 2018, a liquidation order was issued for Eurocom Communications Ltd. (which came into effect on May 3, 2018) and as part of the liquidation ruling, the court clarified that the ruling does not derogate from the control permit in Bezeq. Subsequently, on October 24, 2018, an approval was received for control (effective as from May 3, 2018) in accordance with section 4D of the Communications Law and section 3 of the Communications Order for special managers of Eurocom Communications, who were appointed as part of the liquidation process of Eurocom Communications. The Group believes that the developments in Eurocom Communications that occurred prior to the reporting date, as described above, do not constitute a "change in control" as set out above. Minimum equity The Company undertook that its equity (capital attributed to the Company's shareholders, without non-controlling interests) (hereinafter, the "Equity") according to its last consolidated financial statements published, shall not be less than NIS 650 for the duration of two or more consecutive calendar quarters. The indenture for the Series C Debentures includes a mechanism of adjustment of interest rate in the event of a drop below the Minimum Equity or in the event of a downgrade in the rating of the Series C Debentures. Restriction on distribution The Company undertook not to distribute a dividend to its shareholders and/or perform a buyback of its shares and/or any other distribution as defined in the Companies Law unless all the conditions provided in subsections (a) through (f) below are satisfied: a. The distribution will not cause a downgrade in the rating of the Series C Debentures. b. The Company is not in violation of any of the covenants. c. No grounds for immediate repayment exist at the time a resolution to make a distribution is adopted, and no such grounds exist as a result of such distribution. d. The Company's Equity post-distribution is not less than NIS 800. e. Until full repayment of the principal of the Series C Debentures, the Company shall not distribute a dividend exceeding 75% of the balance of the Company's distributable surpluses (the surplus balance or surpluses accrued in the last two years, in accordance with the definitions provided in the Companies Law) in accordance with its consolidated financial statements. In addition, the Company shall not make a distribution if it recorded an aggregate net loss in the last four quarters preceding the distribution date, on the basis of its last financial statements and/or the quarterly financial report published prior to the distribution date. Ratio of shareholders equity to total balance sheet on separate financial statements Ratio of unconsolidated equity to total unconsolidated balance sheet: The Company's equity shall not be less than 15% of the total balance sheet in accordance with the Company's audited or reviewed (unconsolidated) financial statements (or, alternatively, the quarterly financial report figures, as elected by the Company), as the case may be, for two or more consecutive calendar quarters. According to the indenture of the Series C debentures, as a result of Midroog's rating downgrade as of June 3, 2018 from A1.il to A2.il, the annual coupon of the Series C debentures was increased by 0.25% from 3.6% to 3.85% as of December 3, 2018. For classification of Series C debentures non-current portion to current maturities and the Company's decision to withhold payments to its financial creditors please refer to Note 33D. For rating downgrade and coupon step up of the Company's debentures after the balance sheet date please refer to Note 33E. (4) Below are details of the terms that Bezeq undertook for the loans that it received and the debentures that were issued: 1. For Bezeq's overall debt, standard grounds were included for immediate repayment of the debentures and loans, including breach events, insolvency, dissolution procedures or receivership. In addition, a right was determined to call for immediate repayment if a third-party lender calls for immediate repayment of Bezeq's debts in an amount exceeding the amount determined. In addition, Bezeq has undertaken not to create additional liens on its assets unless liens are created at the same time in favor of the debenture holders and the lending banks (negative lien). The lien includes exceptions, including regarding a lien on assets that will be purchased or expanded by Bezeq, if the undertakings underlying the lien are created for the purchase or expansion of those assets and for the matter of a token lien. 2. For Bezeq's public debentures in the amount of NIS 6.25 billion, bank loans in the amount of NIS 2.6 billion as at December 31, 2018, and for loans from financial institutions in the amount of NIS 2.2 billion as at December 31, 2018, Bezeq has undertaken that if it the Company makes an undertaking towards any entity in respect of compliance with financial covenants, Bezeq will also provide the same undertaking to these lenders (subject to certain exceptions). 3. For Bezeq's public debentures and for loans from financial institutions amounting to NIS 2 billion, grounds were included for immediate repayment, if telecommunication ceases to be the Group's core activity. 4. For Bezeq's public debentures and for loans from financial institutions amounting to NIS 2 billion, Bezeq has undertaken to the lenders to take steps so that, to the extent under its control, the debentures will be rated by at least one rating agency, so long as there are debentures of the relevant series in circulation or a balance in loans, as the case may be. 5. For Debentures (Series 9-10) in the amount of NIS 3.1 billion ,and for loans from financial institutions in the amount of NIS 1.3 billion, grounds for the immediate repayment of the loans in the event of a change in control were included, following which the current controlling shareholders in Bezeq will cease to be controlling shareholders, with the exception of: (1) transfer of control to a transferee that received approval for control in Bezeq in accordance with the provisions of the Telecommunications Law and/or the Telecommunications Order; or (2) transfer of control in which the transferee holds control together with the current controlling shareholders in Bezeq, provided that the holding rate of the current controlling shareholders in Bezeq in the shares of Bezeq does not fall below 50.01% of the total shares of Bezeq held by the controlling shareholders together; or (3) a change in control to be approved by a meeting of the debenture holders/lenders. 6. In addition, for Debentures (Series 9 and 10) and for loans from financial institutions in the amount of NIS 1.3 billion, grounds were included for immediate repayment of the debentures in the event of the recording of a going concern qualification in Bezeq's financial statements for two consecutive quarters, in the event of a material deterioration in Bezeq's business compared with the situation at the time of the issue, and there is real concern that Bezeq will not be able to repay the debentures/loans on time on time (as set out in section 35(I)1a1 of the Israel Securities Law). As at December 31, 2018 and the approval date of the financial statements, Bezeq was in compliance with all its debt undertakings and covanents, there were no grounds to call for immediate repayment, and financial covenants were not set out as described above. C. Movement in liabilities arising from financing activities Debentures (including accrued interest) Loans (including accrued interest) Total NIS NIS NIS Balance as at January 1, 2017 9,637 3,944 13,581 Changes due to cash flows from financing activities Consideration from the issue of debentures and receipt of loans, less transaction costs 635 2,000 2,635 Repayment of debentures and loans (978 ) (835 ) (1,813 ) Interest paid (379 ) (158 ) (537 ) Net cash generated from (used in) finance activities (722 ) 1,007 285 Financing expenses recognized in the statement of income 320 163 483 Balance as at December 31, 2017 9,235 5,114 14,349 Balance as at January 1, 2018 9,235 5,114 14,349 Changes due to cash flows from financing activities Consideration from the issue of debentures and receipt of loans, less transaction costs 819 320 1,139 Repayment of debentures and loans (1,107 ) (686 ) (1,793 ) Interest paid (325 ) (198 ) (523 ) Net cash generated from (used in) finance activities (613 ) (564 ) (1,177 ) Financing expenses recognized in the statement of income 320 188 508 Balance as at December 31, 2018 8,942 4,738 13,680 |
Trade and Other Payables
Trade and Other Payables | 12 Months Ended |
Dec. 31, 2018 | |
Trade and other current payables [abstract] | |
Trade and Other Payables | Note 16 - Trade and Other Payables December 31, 2017 2018 NIS NIS Open accounts* 1,041 862 Checks payable 21 21 Trade payables 1,062 883 Other payables including derivatives: Liabilities to employees and other liabilities for salaries 355 352 Advance payment for Sakia property (see Note 13) - 155 Institutions 87 82 Accrued interest 53 47 Deferred income 90 103 Derivatives 54 43 Other payables 18 37 Total other payables including derivatives 657 819 Total Trade and Other Payables 1,719 1,702 * Of which, the carrying amount of trade payables that are related parties as at December 31, 2018 amounts to NIS 2 (as at December 31, 2017 – NIS 31). |
Provisions
Provisions | 12 Months Ended |
Dec. 31, 2018 | |
Provisions [abstract] | |
Provisions | Note 17 - Provisions Dismantling and clearing of cellular Customer Additional and other claims legal claims sites Total NIS NIS NIS NIS Balance as at January 1, 2018 59 28 47 134 Provisions created 84 15 1 100 Provisions used (6 ) - (2 ) (8 ) Provisions cancelled (3 ) (8 ) (2 ) (13 ) Balance as at December 31, 2018 134 35 44 213 Current 134 35 6 175 Non-current - - 38 38 Claims For details of legal claims, see Note 22. |
Financial Risk Management
Financial Risk Management | 12 Months Ended |
Dec. 31, 2018 | |
Financial Risk Management [Abstract] | |
Financial Risk Management | Note 18 - Financial Risk Management A. General The Group is exposed to the following risks, arising from the use of financial instruments: - Credit risk - Liquidity risk - Market risk (which includes currency, interest, inflation and other price risks) This note provides information about the Group's exposure to each of the above risks, an explanation as to how the risks are managed, and the measurement processes. B. Framework for risk management The Company's Board of Directors has overall responsibility for the Company's risk management. Bezeq's Board of Directors has responsibility for the Bezeq Group's risk management. The purpose of risk management in the Group is to define and monitor those risks constantly, and to minimize their possible effects arising from the exposure on the basis of assessments and expectations for parameters that affect the risks. The Company's policy is to hedge, in part and where required according to policies determined by the board, exposure from fluctuations in foreign currencies rates and the Israeli CPI rates. Bezeq's policy is to hedge, in part and where required according to policies determined by the board, exposure to fluctuations in foreign currencies and the Israeli CPI. C. Credit risk The Company's management monitors the Company's exposure to credit risks on a regular basis. Bezeq's management monitors the Bezeq Group's exposure to credit risks on a regular basis. Cash and investments in deposits and securities are deposited in highly-rated banks. Trade and other receivables Bezeq's management regularly monitors customer debts, and the financial statements include provisions for doubtful debts which properly reflect, in the management's estimation, the loss inherent in doubtful debts. In addition, the balances of trade receivables are widely spread. Investments in financial assets The Company's investment policy, which was approved by its Audit Committee, and established by the Company's Board of Directors, seeks to preserve principal and maintain adequate liquidity while maximizing the income received from investments without significantly increasing the risk of loss. According to the Company's investment policy during 2018, a minimum of 75% of the funds were invested in investment-grade securities. Since January 2019 the Company increased the minimum percentage that must be invested in investment-grade securities to 95%. The Company's marketable securities consist of investment grade securities, corporate debt securities and equity investments (stocks). The Company's investment policy imposes limitations on invested amounts by investment ratings, duration, exposure to a single issuer, exposure to a group of issuers with the same ownership, industries, geographic spread and currency exposure, thereby reducing credit risk concentrations. Transactions involving derivatives are made with entities that have high credit ratings. Any investments made by Bezeq in securities are made in securities which are liquid, marketable and have low risk. Transactions involving derivatives are made with entities that have high credit ratings. As of the reporting date there is no significant concentration of credit risk. D. Liquidity risk The Group's liquidity management policy is to ensure, to the extent possible, adequate liquidity to meet its existing and expected liabilities when they due, in a normal business scenario and under stress conditions, without causing undesirable losses or impairment of goodwill. The cash balances held by the Group, which are not required to finance current operations, are in liquid investment channels and are available for use as required. The Group assesses the existing and expected cash requirements in the foreseeable future, also in the scenario of an unexpected deterioration in its business. These forecasts take into account, among other things, raising and refinancing of debt from banking and non-banking sources. For information about the terms of the debentures issued by Group companies and the loans received, see Note 15 above. E. Market risks The purpose of market risk management is to manage and oversee the exposure to market risks within accepted parameters to prevent significant exposures to market risks that will influence the Group's results, liabilities and cash flows. During the normal course of its business, the Group enters into full or partial hedging actions. The Group takes into account the effects of the exposure in its considerations for determining the type of loans it takes and in the management of its investment portfolio. Israeli CPI risk Changes in the rate of Israeli inflation affect the Group's profitability and its future cash flows, mainly due to its Israeli CPI-linked liabilities. In applying a policy of minimizing the exposure the Company has invested in bonds that are linked to the Israeli CPI in order to partially hedge the exposure to changes in the Israeli CPI. In addition, the Group enters into forward transactions against the Israeli CPI. The duration of the forward transactions is the same as or shorter than the duration of the hedged exposures. Bezeq applies hedge accounting with regards to its forward CPI hedge transactions. A considerable portion of Bezeq's cash balances are invested in deposits, monetary funds or ETF's which are exposed to changes in their real value as a result of changes in the Israeli CPI. Foreign currency risk Bezeq is exposed to foreign currency risks mainly due to payments for purchases of terminal equipment and property, plant and equipment which are in or linked to the US$ or the Euro. In addition, the Group provides services for customers and receives services from suppliers worldwide for which it is paid and it pays in foreign currency, mainly US$. |
Financial Instruments
Financial Instruments | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of detailed information about financial instruments [abstract] | |
Financial Instruments | Note 19 - Financial Instruments A. Liquidity risk Below are the contractual repayment dates of financial liabilities, including estimated interest payments: The Company: December 31, 2018 Carrying Contractual 2024 amount cash flow 2019 2020 2021-2023 and later NIS NIS NIS NIS NIS NIS Non-derivative financial liabilities Trade and other payables 12 12 12 - - - Debentures* 2,455 3,021 319 277 781 1,644 Total 2,467 3,033 331 277 781 1,644 Consolidated: December 31, 2018 Carrying Contractual 2024 amount cash flow 2019 2020 2021-2023 and later NIS NIS NIS NIS NIS NIS Non-derivative financial liabilities Trade and other payables 1,558 1,558 1,558 - - - Bank loans 4,721 5,360 771 835 2,221 1,533 Debentures* 8,913 10,165 1,392 1,327 3,895 3,551 Total 15,192 17,083 3,721 2,162 6,116 5,084 Financial liabilities for derivative instruments Forward contracts on the Israeli CPI 138 138 43 47 48 - For withholding payments of the Company's debentures in the amount of NIS 2,466 par value after the balance sheet date, please refer to Note 33D. Please also refer to Note 1B regarding the Company's ability to continue as going concern. * The Company's contractual repayments in the tables above reflects the original schedule of the Company's debentures. The Company's debentures including accrued interest in the amount of NIS 2,467 were classified as current maturities on the statements of financial position as of December 31, 2018, please refer to Note 33D. B. Linkage and foreign currency risks December 31, 2017 Foreign Israeli currency linked Unlinked CPI-linked (mainly US$) NIS NIS NIS Current assets Cash and cash equivalents 2,322 - 64 Trade receivables 1,862 36 17 Other receivables 44 154 - Related party 43 - - Investments including derivatives 445 32 119 Total current assets 4,716 222 200 Non-current assets Trade and other receivables 372 121 - Investments including derivatives 51 - 67 Total non-current assets 423 121 67 Total assets 5,139 343 267 Current liabilities Debentures, loans and borrowings 1,213 645 - Trade and other payables 1,344 56 237 Total current liabilities 2,557 701 237 Non-current liabilities Debentures and bank loans 9,104 3,333 - Other liabilities including derivatives - 159 10 Total non-current liabilities 9,104 3,492 10 Total liabilities 11,661 4,193 247 Total exposure in the statement of financial position (6,522 ) (3,850 ) 20 Forward transactions (2,308 ) 1,994 314 December 31, 2018 Foreign Israeli currency linked Unlinked CPI-linked (mainly US$) NIS NIS NIS Current assets Cash and cash equivalents 1,058 - 46 Trade receivables 1,732 22 19 Other receivables 92 136 - Investments including derivatives 1,613 56 110 Total current assets 4,495 214 175 Non-current assets Trade and other receivables 365 105 - Investments including derivatives 49 - 41 Total non-current assets 414 105 41 Total assets 4,909 319 216 Current liabilities Debentures, loans and borrowings 3,365 632 - Trade and other payables 1,382 53 166 Total current liabilities 4,747 685 166 Non-current liabilities Debentures and bank loans 6,879 2,758 - Other liabilities including derivatives - 95 5 Total non-current liabilities 6,879 2,853 5 Total liabilities 11,626 3,538 171 Total exposure in the statement of financial position (6,717 ) (3,219 ) 45 Forward transactions (1,520 ) 1,350 170 Information regarding the Israeli CPI and significant exchange rates: Year ended December 31 December 31 2016 2017 2018 2016 2017 2018 Rate of change Reporting date spot rate % % % NIS NIS NIS 1 US dollar (1.5 ) (9.8 ) 8.1 3.845 3.467 3.748 1 euro (4.8 ) 2.7 3.32 4.044 4.153 4.291 Israeli CPI in Points (0.3 ) 0.4 0.9 139.59 140.00 141.26 A change of 1% of the CPI as at December 31, 2018 would have effect of NIS 14 on total equity and net income. This analysis assumes that all other variables, in particular interest rates, remain constant. In addition, A change of 10% in the US$ exchange rate as at December 31, 2018 would have immaterial effect on total equity and net income. C. Interest rate risk 1. Profile At the reporting date the interest rate profile of the Group's interest-bearing financial instruments was: December 31 2017 2018 NIS NIS Fixed rate instruments Financial assets 1,986 2,739 Financial liabilities (12,888 ) (12,547 ) (10,902 ) (9,808 ) Variable rate instruments Financial assets 30 59 Financial liabilities (1,407 ) (1,086 ) (1,377 ) (1,027 ) 2. Fair value sensitivity analysis for fixed rate financial liabilities and derivatives The Group's assets and liabilities at fixed interest are not measured at fair value through profit or loss. Accordingly, a change in interest rates at the reporting date will not affect profit or loss. 3. Sensitivity analysis of cash flow for instruments at variable interest An increase/decrease of 1% in the interest rates at the reporting date would not have a material effect on profit and on capital. D. Cash flow hedge accounting Cash flow hedges for CPI-linked liabilities The Bezeq Group entered into several forward contracts, as described in the table below, to reduce exposure to changes in the CPI for CPI-linked Debentures (Series 6). These transactions hedge specific cash flows of some of the debentures and are recognized as cash flow hedge accounting. The expiry date of these transactions complies with the repayment schedule of the relevant debentures. The fair value of the forward contracts is based on available market information (tier 2 in the fair value hierarchy) Number of Nominal Capital Hedge item Repayment date Transactions Value Fair value reserve NIS NIS NIS December 31, 2017: Debentures (Series 6) December 2018 - December 2022 9 1,994 (200 ) 48 1,994 (200 ) 48 December 31, 2018: Debentures (Series 6) December 2019 - December 2022 6 1,350 (138 ) 12 1,350 (138 ) 12 Subsequent to the reporting date, the Company entered into four forward transactions for Debentures (Series 10). The transactions amount to NIS 75 each, payable between December 2022 and December 2025. DBS has forward transaction to reduce exposure to changes in the USD exchange rate. As at December 31, 2018, the net fair value of these transactions is an asset of NIS 3 (as at December 31, 2017, a liability of NIS 12). E. Fair value (1) Financial instruments measured at fair value for disclosure purposes only The table below shows the difference between the carrying amount and the fair value of groups of financial instruments. The carrying amount of other financial assets and liabilities does not differ significantly from their fair value. The fair value of debentures issued to the public is based on their quoted closing price at the reporting date (Level 1). The fair value of loans and non-marketable debentures is based on the present value of future principal and interest cash flows, discounted at the market rate of interest suitable for similar liabilities plus the required adjustments for risk premium and non-marketability at the reporting date (Level 2). December 31, 2017 December 31, 2018 Fair value weighted average Carrying Fair Carrying Fair discount amount value amount value rate NIS NIS NIS NIS % Secured loans from banks and others Unlinked 4,436 4,693 4,235 4,324 3.09 Debentures Issued to the public (CPI linked) 4,088 4,338 3,464 3,602 0.88 Issued to the public (Unlinked) 4,097 4,322 4,681 4,405 2.86 Issued to institutional investors (CPI linked) 15 17 8 8 0.55 Issued to institutional investors (unlinked) 302 326 202 211 3.11 12,938 13,696 12,590 12,550 (2) Financial instruments measured at fair value The table below analyses financial instruments carried at fair value, by valuation method. December 31, 2017 Level 1 Level 2 Level 3 Total NIS NIS NIS NIS Financial assets held for trading Monetary funds and ETFs 14 - - 14 Marketable securities 375 - - 375 Forward contracts - (212 ) - (212 ) Contingent consideration for a business combination - - (14 ) (14 ) 389 (212 ) (14 ) 163 December 31, 2018 Level 1 Level 2 Level 3 Total NIS NIS NIS NIS Financial assets held for trading Monetary funds and ETFs 18 - - 18 Marketable securities 376 - - 376 Forward contracts - (135 ) - (135 ) 394 (135 ) - 259 a. The fair value of investments in financial funds, ETFs and marketable securities is determined by reference to their average quoted selling price at the reporting date (Level 1). b. The fair value of forward contracts on the CPI or foreign currency is based on discounting the difference between the price in the forward contact and the price of the present forward contact for the balance of the contract term until redemption, at an appropriate interest rate (Level 2). The estimate is made under the assumption that a market participant takes into account the credit risks of the parties when pricing such contracts. F. Offset of financial assets and liabilities The Group has agreements with various communication companies to supply and receive communication services. The table below presents the carrying amount of the balances as stated in the statement of financial position: December 31, 2017 2018 NIS NIS Trade and other receivables, gross 115 94 Offset amounts (99 ) (83 ) Trade and other receivables presented in the statement of financial position 16 11 Trade payables, gross 143 121 Offset amounts (99 ) (83 ) Trade and other payables presented in the statement of financial position 44 38 |
Employee Benefits
Employee Benefits | 12 Months Ended |
Dec. 31, 2018 | |
Employee Benefits [Abstract] | |
Employee Benefits | Note 20 - Employee Benefits Employee benefits include post-employment benefits, other long-term benefits, termination benefits, short-term benefits. A. Liabilities for employee benefits December 31, 2017 2018 NIS NIS Current liabilities for: Holiday 115 112 Sick leave 142 133 Early retirement 16 329 Current maturities of pensioner benefits 7 7 Total current liability for employee benefits 280 581 Non-current liabilities for: Voluntary redundancy for employees transferred from civil service - 241 Liability for pensioner benefits 120 115 Severance compensation (net) (see composition below) 57 54 Early notice 23 23 Pension 72 12 Total non-current liabilities for employee Benefits 272 445 Total liabilities for employee benefits 552 1,026 Composition of liabilities for severance pay: Liabilities for severance pay 224 218 Fair value of plan assets (167 ) (164 ) 57 54 B. Defined contribution plans (1) Liabilities for employee benefits at retirement age in respect of the period of their service with Bezeq and its subsidiaries, and for employees to which Section 14 of the Severance Pay Law – 1963 applies, are covered in full by regular payments made by Bezeq and its subsidiaries to pension funds and insurance companies. Year ended December 31, 2016 2017 2018 NIS NIS NIS Amount recognized as an expense for a defined contribution plan 209 228 232 The pension rights of the Bezeq Group employees for the period of their employment in the civil service through January 31, 1985, are covered by a pension fund (“the Makefet Fund”), which assumed the State’s obligation following an agreement between the Government of Israel, the Company, the Histadrut Federation of Labor and the Makefet Fund. The severance obligation to employees who leave their employment on terms entitling them to compensation is covered, for the period from February 1, 1985, by regular contributions to such pension funds and insurance companies (in accordance with Section 14 of the Severance Pay Law). Severance pay for the period of employment in the civil service through January 31, 1985, is paid by the Bezeq Group, and the monies accumulated in the Makefet Fund for that period are kept in a fund that will be used for the employees’ rights. For certain employees, the Bezeq Group has an obligation to pay severance in excess of the amount accumulated in the compensation fund which is in the employees’ names. See section below. C. Defined benefit plans Obligations for defined benefit plans in the Bezeq Group include the following: (1) The severance obligation for the balance of the obligation not covered by contributions and/or insurance policies in accordance with the existing labor agreements, the Severance Pay Law, and the salary components which the managements of the companies believe entitle the employees to receive compensation. For this part of the obligation, there are deposits in the name of Bezeq Group companies in pension funds and insurance companies. The deposits in pension funds and insurance companies include accrued linkage differences and interest. Withdrawal of the reserve monies is contingent upon fulfilment of the provisions in the Severance Pay Law. (2) An obligation in accordance with the collective agreement of 2006 for employees who transferred from civil service to Bezeq, and who are entitled, following retirement, to a supplement in pension payments for the difference between the Civil Service Law and the standard policy of Makefet. In addition, see Note 20.E below for information about the approval of the Board of Directors for the retirement plan for all employees of the Bezeq who were transferred to Bezeq from the Ministry of Communications. Bezeq also has an obligation to a number of senior employees who are entitled to voluntary redundancy terms (pension and retirement grants) which are not dependent on the existing retirement agreements for all employees. (3) An obligation in accordance with the employment agreements of some of the senior employees in the Group for payment of a benefit for notice upon severance. (4) Bezeq’s retirees receive, in addition to pension payments, benefits which consist mainly of a holiday gift (linked to the dollar exchange rate), financing for the upkeep of retiree clubs and social activities. Bezeq’s liability for these costs accumulates during the employment period. The Company’s financial statements include the liabilities for expected costs in the post-employment period. D. Sick leave provision The financial statements include a provision in respect of redemption and utilization of sick leave. The right to accumulate sick leave was taken into account for all employees in the Bezeq Group. Only employees eligible under the terms of the employment agreement may redeem sick leave. The provision was computed on the basis of an actuarial calculation, including the assumption of positive accumulation of days by most of the employees and utilization of days in accordance with the last in first out (LIFO) method. E. Benefits for early retirement and termination According to the collective agreement of December 2006, between Bezeq and the employee’s union and the Histadrut Federation of Labor, and according to the amendment to the agreement of August 2015, the Company may, at its discretion, terminate the employment of 163 long-standing permanent employees in each of the years 2015-2021 (the Company’s right is accumulated over the years). The Bezeq Group recognizes expenses for voluntary redundancy when it is committed demonstrably, without realistic possibility of withdrawal, to a defined plan to terminate employment before the defined date, according to a defined plan. The collective agreement allows Bezeq to dismiss employees but does not create a demonstrable commitment without realistic possibility of withdrawal. Accordingly, the expenses for voluntary redundancy are recognized in Bezeq’s financial statements at the approval date of the plan. In the first half of 2018, the voluntary redundancy plan was approved, and 71 employees retired at a cost of NIS 92. On December 16, 2018, a plan was approved for the implementation of an efficiency plan for 2019 for the retirement of 243 permanent employees (new and old). In addition, a voluntary retirement plan was decided on, by the end of the collective agreement period (the end of 2021) for all employees of Bezeq who were transferred to Bezeq from the Ministry of Communications (94 employees). The financial statements include an expense of NIS 452 for these plans. In addition, in 2018, retirement expenses were recognized in the amount of NIS 15, mainly for employee severance benefits in the Bezeq Group companies. The Bezeq Group companies have collective agreements with the Histadrut Federation of Labor and the employees’ committees. The agreements include mechanisms to integrate the employees’ committees in decisions regarding the termination of permanent employees and the terms of severance. For information about the collective arrangement signed by DBS subsequent to the date of the financial statements, see Note 33.2. F. Actuarial assumptions The main actuarial assumptions for defined benefit plans at the reporting date are as follows: Mortality rates are based on the rates published in Insurance Circular 03/06/17 of the Ministry of Finance. Churn rates were determined on the basis of the past experience of the Bezeq Group and the subsidiaries, distinguishing between different employee populations and taking into account the number of years of employment. The churn rates include a distinction between severance with entitlement to full severance compensation and severance without entitlement to this right. The discount rate (nominal) is based on the yield on linked high-quality corporate debentures with maturity dates approximating those of the gross obligation. The main discount rates are as follows: December 31, 2017 December 31, 2018 Average capitalization rate Average capitalization rate % % Severance compensation 3.3 3.73 Retirement benefits 3.6 4.1 Assumptions regarding salary increments for calculation of the liabilities were made on the basis of the management’s assessments, distinguishing between the groups of employees. The main assumptions (in nominal terms) regarding salary increases of the main employee groups are as follows: Salary increase assumptions Bezeq permanent employees Regarding an expected wage increase for 2019-2026, an average update of 7% for young employees, and decreasing gradually to 2.7% at the age of 66. New Bezeq permanent employees Average update of 3.2% for young employees, decreasing gradually to 1.4% at the age of 66. Bezeq non-permanent employees 6.4% for young employees decreasing gradually to 0.1%, 2% ( in real terms ) for senior employees. 2% (in real term) for senior employees Pelephone employees An increase of 3% in 2018 (2017- 3.1%), as set out in the collective agreement at Pelephone Bezeq International employees An increase of 3%, as set out in the collective agreement at Bezeq International DBS employees Rate of increase of 3.5% Regarding Bezeq’s employees, as well as the assumption of the age-dependent wage increase, an expected individual wage growth was assumed for 2019-2026, arising from the collective agreement that was signed in August 2015. (5) Sensitivity analysis for actuarial assumptions The following is an analysis of the possible effect of the changes in the principal actuarial assumptions on liabilities to employee benefits. The calculation is made for each assumption separately, assuming that the remaining assumptions remain unchanged. Year ended December 31, 2017 2018 Years Years Discount rate - addition of 0.5% (29 ) (37 ) Rate of future salary increases - addition of 0.5% 40 27 Rate of employees leaving - addition of 5.0% (17 ) (12 ) (6) Average weighted useful life of liabilities for the main severance benefits: Year ended December 31, 2017 2018 Years Years Severance compensation 10.4 9.9 Retirement benefits 14.7 13.6 |
Income Tax
Income Tax | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax [Abstract] | |
Income Tax | Note 21 - Income Tax A. Corporate tax rate The corporate tax rate for 2016, 2017 and 2018 was 25%, 24% and 23%, respectively. Deferred tax balances as at December 31, 2018 were calculated according to the new tax rates expected to apply on the date of reversal. The current taxes for the reported periods are calculated according to the actual tax rates as set out above. B. Composition of income tax expenses Year ended December 31, 2016 2017 2018 NIS NIS NIS Current tax expenses Expenses for the current year 437 438 311 Adjustments for prior years (28 ) 54 (24 ) Total current tax expenses 409 492 287 Deferred tax expenses (income) Adjustments for prior years according to an assessment agreement - (54 ) - Reversal of temporary differences according to an assessment agreement - 21 - Write-off of a provision for tax due to impairment, see Note 9 - - (114 ) Creation and reversal of temporary differences (33 ) (112 ) (232 ) Total deferred tax expenses (33 ) (145 ) (346 ) Income tax expenses (benefit) 442 347 (59 ) C. Reconciliation between the theoretical tax on the pre-tax income and the tax expense Year ended December 31, 2016 2017 2018 NIS NIS NIS Income (loss) before income tax 930 1,088 (1,918 ) Statutory tax rate 25 % 24 % 23 % Income tax at the statutory tax rate 232 260 (441 ) Effect of changes in tax rate on deferred taxes 67 - - Expenses not recognized for tax purposes 47 48 54 Current year tax losses and benefits for which deferred taxes were not created 124 39 168 Temporary differences for impairment of assets for which no deferred tax assets were created (Note 9) - - 160 Taxes in respect of previous years (28 ) - - Income tax expenses (benefit) 442 347 (59 ) D. Recognized deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following items: Property, plant equipment, Carry- Brand and Employee forward Names and intangible benefits losses for Customers assets plan DBS relationship Others Total NIS NIS NIS NIS NIS NIS Balance of deferred tax asset (liability) as at December 31, 2016 (348 ) 178 1,188 (615 ) 11 414 Recognized in profit or loss 25 (13 ) (22 ) 127 28 145 Recognized in equity - - - - 1 1 Balance of deferred tax assets (liability)as at December 31, 2017 (323 ) 165 1,166 (488 ) 40 560 Balance of deferred tax asset (liability) as at December 31, 2017 (323 ) 165 1,166 (488 ) 40 560 Recognized in profit or loss (14 ) 101 - 71 (18 ) 140 Write-off of deferred tax (See Note9) - - - 207 - 207 Recognized in equity - 2 - - (6 ) (4 ) Balance of deferred tax assets (liability)as at December 31, 2018 (337 ) 268 1,166 (210 ) 16 903 E. Unrecognized deferred tax assets or liabilities and carry-forward tax loss As at December 31, 2018, the Company has tax loss carry-forwards in the amount of NIS 72 and capital loss carry forwards in the amount of NIS 51. Deferred tax assets with respect to the Company's tax and capital losses mentioned above were not created since their utilization is not probable. Moreover, deferred taxes of NIS 160 for an impairment loss in DBS are not taken into account since their utilization is not expected (see section F below). The calculation of deferred taxes does not take into account the taxes that would be applicable in the case of disposal of investments in subsidiaries and associates, since the Group intends and is able to retain these investments. Deferred taxes in respect of a distribution of profit in subsidiaries and associates were also not taken into account since the dividends are not taxable. F. Deferred tax asset for the losses of DBS The deferred tax asset for the carryforward tax losses of DBS amounts to NIS 1,166. The approval from the Tax Authority for the utilization of the tax asset is subject to approval from the Ministry of Communications for cancellation of the structural separation and requires the extension from the Tax Authority for an additional year as from 2020 every year until the actual merger of DBS and Bezeq (see section G(5) below). The Ministry of Communications set up a team within the Ministry to review an amendment to the requirement for structural separation. Bezeq applied to the Ministry of Communications for clarification regarding the date of its approval for elimination of the structural separation and petitioned the High Court of Justice against the Ministry of Communications to immediately cancel the structural separation of the Bezeq Group, after the Ministry did not respond to Bezeq's inquiries on the matter, despite the fact that Bezeq believes that it had fulfilled all the conditions that justify and require the elimination of the structural separation, in accordance with the policy document dated May 2, 2012 regarding the expansion of competition in fixed line communications - wholesale market, which was published by the Ministry of Communications. Assuming utilization of the tax asset, based on the current assessment of Bezeq's management, that taking into account the above measures, it is more likely than not that it will receive approval with conditions to allow the utilization of the tax asset, and that as at the merger date, the merged company is expected to have taxable income that will allow the offsetting of carryforward tax losses and utilization of the tax asset. As set out in Note 2G above, recognition and measurement of the tax asset is a significant estimate. The amount of the asset recognized in Bezeq's financial statements is sensitive to various assumptions, including: the forecast of the taxable income of Bezeq and DBS (based on Bezeq's forecasts as at December 31, 2018, which are included in the valuations of Bezeq and DBS, using coefficients that reflect the uncertainty involved in the long-term forecasts); the forecast period, in which Bezeq believes that taxable income can be forecasted on a level of certainty of "more likely than not" (up to 25 years); and the date on which it is expected that regulatory approval will be obtained, allowing the utilization of carryforward losses (by the end of 2022). Actual results may differ from this estimate, if the current assessments of Bezeq do not materialize. G. Final tax assessments (1) The Company has final tax assessments up to and including 2014. (2) On January 22, 2015, the Company entered into a tax assessment agreement with the Israeli Tax Authority (the "Agreement"), with respect to final tax assessments with respect to: (i) tax years 2007-2009; and (ii) the sale of its legacy communications business that was completed on January 31, 2010. According to the Agreement, the Company paid the Israeli Tax Authority NIS 148, including interest and CPI linkage differences, in 24 monthly instalments starting in February 2015. (3) On April 27, 2017, the Company entered into a tax assessment agreement with the Israeli Tax Authority (the "Agreement") with respect to final tax assessments for the tax years 2010-2014. The Agreement covers all pending tax assessments and other tax matters with respect to such years. According to the Agreement, the Company paid the Israeli Tax Authority NIS 25, including interest and CPI linkage differences. (4) Bezeq has final tax assessments up to and including 2014. (5) On September 15, 2016, parallel to signing the assessment agreement ending the disputes between Bezeq and the tax assessor that ended the dispute between Bezeq regarding the financing income for the shareholder loans to DBS, the Tax Authority granted approval for tax purposes for the merger of DBS with and into Bezeq, in accordance with section 103(B) of the Income Tax Ordinance. According to the approval, the losses of DBS as at the merger date may be offset against the profits of the absorbing company, provided that in each tax year, it will not be permitted to offset an amount exceeding 12.5% (spread over eight years) of the total losses of the transferring company and the absorbing company, or 50% of the taxable income of the absorbing company in that tax year prior to offsetting the loss from previous years, whichever is lower. The Approval was granted in accordance with the applicable tax laws in effect at the time. Without derogating from the amount of the losses set out in the Assessment Agreement, if there is any change in the applicable tax laws, the Income Tax Authority will reconsider the taxation decision in accordance with the tax laws applicable at the merger date. However, it is clarified that the Approval is effective until December 31, 2019. The Income Tax Authority will extend the date of the Approval each year by an additional year, subject to the declaration of Bezeq and DBS that there has been no material change in their business affairs and subject to the terms of the taxation decision, and subject to the interpretation given to the tax laws, provided that such interpretation is published in writing. Any change in the tax laws that does not require a change in the Approval will not result in any such change. The tax losses of DBS as at December 31, 2018 amount to NIS 5 billion. (6) Pelephone has received final tax assessments up to and including 2014. (7) Bezeq International has received final tax assessments up to and including 2015. (8) DBS has received final tax assessments up to and including 2013. (9) Walla has final tax assessments up to and including 2012 and a best judgment assessment for 2014 for the payment of additional tax in the amount of NIS 19 regarding the disposal of the holdings in Coral Tel Ltd. |
Contingent Liabilities
Contingent Liabilities | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of contingent liabilities [abstract] | |
Contingent Liabilities | Note 22 - Contingent Liabilities A. Legal proceedings against the Company (1) On June 29, 2017, Plaintiff Lynne P. Maleeff commenced litigation on behalf of a purported class of all persons and entities who purchased or otherwise acquired our shares between March 18, 2015 and September 6, 2017. The original defendants were the Company, Doron Turgeman (our former CEO), Itzik Tadmor (our CFO) and Ehud Yahalom (our former CFO). On December 8, 2017, lead plaintiffs filed an amended complaint adding ten new defendants: Shaul Elovitch, Or Elovitch, Ron Eilon, Stella Handler, David Mizrahi, Micky Neiman, Allon Raveh, Linor Yochelman, DBS and Eurocom Communications. The amended complaint alleges a single cause of action against the Company for violation of Section 10(b) of the Exchange Act and SEC Rule 10b-5 promulgated thereunder. The complaint alleges that the Company made false and misleading statements and omissions in its SEC filings. On February 20, 2018, the Company moved to dismiss the litigation for failure to state a claim or, alternatively, to stay the litigation pending the outcome of criminal investigations in Israel. Our motion to dismiss asserted that plaintiffs failed to allege that the Company had the required knowledge or scienter about the purported wrongdoing by other defendants and that the Company did not make any materially false statements. Plaintiffs filed their opposition to the motion. The court issued a decision dated September 27, 2018 granting in part and denying in part our motion to dismiss. The court dismissed all claims against our company relating to our code of ethics, internal controls, and compliance with laws generally and all claims relating to the Bezeq subcommittee reviewing the Bezeq-DBS transaction except for certain allegations relating to statements in one particular filing and to allegations regarding our statements about our or Bezeq’s free cash flow. The court denied our motion to stay without prejudice to our ability to seek a stay in the future if circumstances change. On July 12, 2018, motions to dismiss were filed by (1) defendants Doron Turgeman, Itzik Tadmor, and Ehud Yahalom, all former officers of our company, (2) Ron Eilon, Micky Neiman and DBS; and (3) Stella Handler, Allon Raveh, Linor Yochelman, and David Mizrahi, officers of Bezeq. On March 28, 2019, the court concluded that the complaint failed to allege claims against our executive officers for either primary violations of the U.S. securities laws or “control person” liability for the alleged violations by others of the U.S. securities laws. The court therefore dismissed the complaint against Doron Turgeman, Itzik Tadmor and Ehud Yahalom. The court also concluded that the complaint failed to adequately allege personal jurisdiction against certain executive officers of Bezeq and DBS. The court therefore dismissed the complaint against the DBS and Bezeq defendants for lack of personal jurisdiction. The claims against our company are stayed under the governing statute pending the outcome of the other defendants’ motions to dismiss. While the Company have solid arguments in our favor, it is unable to assess to predict how the court will ultimately rule. Similar class action lawsuits were filed in Israel and are described in section B below. (2) The Company, Internet Gold and five members of the Company’s Board of Directors were named as respondents in a motion to certify a claim as a derivative claim instituted in the Tel Aviv District Court (Economic Affairs Division) on July 28, 2016. The plaintiff has alleged that NIS 113 out of the dividends distributed by us in May 2016 was distributed unlawfully as such amount was not included in our profit and loss report, and therefore does not qualify as a “surplus” that may be lawfully distributed as dividends under the Israeli Companies Law. A pretrial hearing was held in March 2017, in which the court allowed us to file an additional brief response and a supplementary expert opinion, in order to respond to the arguments. The Company filed the additional responses in June 2017. The court further held that the parties should consider the possibility of a constructive dialogue regarding the issues in dispute and instructed the parties to inform the court about the results of this dialogue, and whether they want to set a date for an evidentiary hearing or additional preliminary motions. The dialogue process failed, and accordingly, the court set dates for the evidentiary hearing (as part of the motion to certify) for January 6, 2019. On January 6, 2019, evidentiary hearings were held. The court decided that our summaries must be submitted by May 28, 2019, and the reply on behalf of the plaintiff must be submitted by June 10, 2019. The Company believe it is likely that the motion will be approved since the burden of proof at this preliminary stage of the derivative claim is very low. B. Legal proceedings against the Bezeq Group During the normal course of business, legal claims are filed against the Bezeq Group companies or there are pending claims against the Bezeq Group (“in this section: “Legal Claims”). In the opinion of the managements of the Bezeq Group companies, based, among other things, on legal opinions as to the likelihood of success of the claims, the financial statements include adequate provisions (as described in Note 17), where provisions are required to cover the exposure resulting from such claims. In the opinion of the managements of the Bezeq Group companies, the additional exposure (beyond these provisions) as at December 31, 2018 for claims filed against Group companies on various matters and which are unlikely to be realized, amounted to NIS 5.1 billion. There is also additional exposure of NIS 4.6 billion for claims, the chances of which cannot yet be assessed. In addition, motions for certification of class actions have been filed against the Bezeq Group companies, for which the Bezeq Group has additional exposure beyond the aforesaid, since the exact amount of the claim is not stated in the claim. The amounts of the additional exposure in this note are linked to the CPI and are stated net of interest. Following is a detailed description of the Bezeq Group’s contingent liabilities at December 31, 2018, classified into groups with similar characteristics. Balance of provisions Amount of additional exposure Amount of exposure for claims for which the amount of exposure cannot be assessed Claims group Nature of the claims NIS NIS NIS Customer claims Mainly motions for certification of class actions concerning contentions of unlawful collection of payment and deterioration in service provided by the Group companies. 134 4,954 *730 Claims by enterprises and companies Claims alleging liability of the Group companies in respect of their activities and/or the investments made in various projects. 4 **13 **,***3,822 Claims of employees and former employees of Group companies Mainly individual lawsuits filed by employees and former employees of the Group, regarding various payments. - 3 - Claims by the State and authorities Various claims by the State of Israel, government institutions and authorities (“the Authorities”). These are mainly procedures related to regulations relevant to the Group companies and financial disputes concerning monies paid by the Group companies to the Authorities (including property taxes). 31 21 - Supplier and communication provider claims Legal claims for compensation for alleged damage as a result of the supply of the service and/or the product. - 65 9 Claims for punitive damages, real estate and infrastructure Claims for alleged physical damage or damage to property caused by Group companies and in relation to real estate and infrastructure. The additional amount of exposure for punitive damages does not include claims for which the insurance coverage is not disputed. - 71 - Total legal claims against the Bezeq Group companies 169 5,127 4,561 * Including exposure in the amount of NIS 300 against a subsidiary and against four additional defendants. ** Including exposure of NIS 2 billion for a motion for certification as a class action filed by a shareholder against Bezeq and officers in Bezeq, referring to alleged reporting omissions by Bezeq regarding the wholesale market and the reduction of interconnect fees, which the plaintiff estimates at NIS 1.1 billion or NIS 2 billion (depending on the method used to calculate the damage). On August 27, 2018, the court certified the claim as a class action. On October 28, 2018, Bezeq filed a motion for a rehearing of the certification ruling. Subsequently, the court decided to stay the proceedings until a ruling is made on the motion for a rehearing. *** Two motions for certification of a class action seeking a total of NIS 1.8 billion, filed in June 2017 against Bezeq, officers in the Bezeq Group, B Communications and companies in the group of our controlling shareholders regarding the transaction relating to Bezeq’s acquisition of DBS shares from Eurocom DBS Ltd. In accordance with the court’s decision, a joint motion is expected to be filed instead of these two motions. The proceeding was stayed due to the investigation. The court approved the request of the Attorney General to inform the court by October 31, 2019, of the continued conduct of the proceedings in view of the ongoing investigation. (1) In 2017 and in June 2018, shareholders of Bezeq, filed motions against Bezeq and DBS for discovery of documents prior to filing a motion for certification of a derivative action in accordance with section 198A of the Companies Law, regarding an interested party transaction between DBS and Spacecom and regarding a transaction for the acquisition of DBS shares by Bezeq. Further to the request of the Israel Securities Authority, in view of the investigation, the procedures have been stayed, at this stage, until April 1, 2019. It should be noted that in addition to these motions, there is a pending claim and motion for certification as a derivative action against Bezeq, its ultimate controlling shareholder in the relevant period and its directors in the relevant period, from 2015, concerning the transaction for Bezeq’s acquisition of the entire holdings and shareholder’s loans of Eurocom DBS in DBS. Further to the position of the ILA, the court ordered a stay of proceedings in the case until December 31, 2018, and on that day, notice was submitted on behalf of the Israel Securities Authority requesting an additional 90-day extension. (2) In February 2018, a motion for certification of the claim as a derivative action was filed against Bezeq as a formal respondent, and against directors of Bezeq at the times relevant to the motion and against the controlling shareholders in Bezeq at the times relevant to the motion. The motion relates to Bezeq’s engagement in an assessment agreement with the Tax Authority, which was signed on September 15, 2016, according to which Bezeq paid taxes in the amount of NIS 462 to the Tax Authority for financing income from loans to DBS. On the other hand, it was agreed, among other things, that the losses of DBS for the financing expenses for the shareholders’ loans of Bezeq to DBS will be recognized in full for Bezeq after the merger between Bezeq and DBS. At the request of the Israel Securities Authority, the proceedings were stayed due to the investigation until December 31, 2018, and it requested an extension of the stay in proceedings until April 1, 2019. (3) In December 2018, a claim was filed against Walla, alleging that Walla had engaged in biased press coverage on its website in favour of the Prime Minister, allegedly in exchange for excessive regulatory benefits granted to its controlling shareholder - Bezeq and its former controlling shareholder. The amount of the class action is unknown. At this stage, Walla is unable to assess the chances of the claim. (4) Subsequent to the balance sheet date, two claims were filed against the Bezeq Group companies without an exact amount and one claim was filed with exposure of NIS 15. As at the approval date of the financial statements, the chances of the claims cannot be assessed. In addition, claims with exposure of NIS 406 and other three claims without an exact amount came to an end. |
Agreements
Agreements | 12 Months Ended |
Dec. 31, 2018 | |
Agreements [Abstract] | |
Agreements | Note 23 - Agreements A. DBS has agreements for the acquisition of space segments, content, and copyrights, up to the end of 2028. The amounts of future agreements for these contracts as at December 31, 2018 are as follows: Space segments Content and copyright Total Year ended December 31 NIS NIS NIS 2019 85 495 580 2020 85 354 439 2021 85 260 345 2022 82 225 307 2023 onwards 485 64 549 822 1,398 2,220 B. In accordance with the agreement with the 2013 Space Communications Ltd. (“Spacecom”), as amended, DBS leases twelve space segments in the Amos satellites (“the Spacecom Agreement”) according to the distribution among the satellites set out in the agreement for different periods. The term of the Spacecom Agreement is up to 2028 (subject to the options for early termination described below). In accordance with the Spacecom Agreement, DBS leases space segments on the Amos 3 satellite (which is expected to end its service at the beginning of 2026), as well as on the Amos 7 satellite, in which Spacecom has the right to lease space segments under an agreement with the holder of rights in this satellite, which was leased to DBS until February 2021. Spacecom undertook to exercise the option granted to it by the holder of the satellite rights to extend the lease for an additional year, and on the deadline for exercising this option, if it will be clear that Amos 8 a new satellite will not be in service by February 2021. Under the Spacecom Agreement, Spacecom has undertaken to make the most reasonable efforts to deploy the new satellite, Amos 8, by February 2021, and in this event, DBS will lease space segments from that date in Amos 3 and in Amos 8, and from the end of life of Amos 3, in Amos 8 only. If Amos 8 is not deployed by February 2022, DBS will lease ten satellite segments in Amos 3 until the end of its life, and will have the right, if it so chooses, to lease space segments in Amos 8, to the extent it is deployed at a later stage. The Spacecom Agreement stipulates the right to early termination without cause, subject to advance notice of 12 months and payment of the consideration in accordance with the prescribed mechanism. The agreement also stipulates the right to early termination due to a delay in the entry into force of the agreement for construction of Amos 8, and early termination at the end of the lifespan of Amos 3 due to non-availability of Amos 8, without payment of compensation and under the conditions set out in the agreement. In September 2018, Spacecom announced that the agreement for the construction of the Amos 8 satellite will be canceled and that it is assessing the feasibility of several alternatives. DBS believes that cancellation of the agreement may result in a delay in the start of the Amos 8 satellite activity. In December 2018, Spacecom was notified that DBS would not act to amend the Spacecom Agreement, and that it reserves the right not to lease segments on the Amos 8 satellite if there is a delay in its deployment as set out above. The total amount of agreements for space segments, as set out in section 20.1 above, includes full payment of NIS 236 for the use of the Amos 8 satellite. For information about the agreement with Spacecom, see Note 32 regarding the agreements with related parties. In addition to the resolution of the Board of Directors to approve a plan for the migration of DBS from satellite broadcasts to internet streaming, see Note 33.1. C. In October 2016, Pelephone’s new agreement with Apple Distribution International (“Apple”) came into effect for the acquisition and distribution of iPhone devices. In accordance with the agreement, Pelephone is required to purchase a minimum number of devices for an additional three years at the prices in effect at the manufacturer at the actual purchase date. D. As at December 31, 2018, Pelephone has obligations to acquire terminal equipment amounting to NIS 78 (as at December 31, 2017, NIS 147). E. The cellular infrastructure equipment in the UMTS/HSPA and LTE networks is manufactured by LM Ericsson Israel Ltd. (“Ericsson”), which serves as a supplier to Pelephone for the deployment of a fourth-generation radio network (LTE). Ericsson is also a material supplier to Pelephone of microwave transmission equipment. Pelephone has multi-annual agreements for maintenance, support and upgrade of software for the UMTS/HSPA network and an agreement for acquisition of 4G network (LTE) equipment with Ericsson, and Pelephone believes that it may dependent on Ericsson for network support and its expansion. As at December 31, 2018, Pelephone has agreements with Ericsson for the acquisition of terminal equipment and the receipt of services, in a total amount of NIS 23. F. In 2011, Bezeq International entered into an agreement with CYTA to replace indefeasible rights of use (IRU). Under the transaction, Bezeq International undertook to acquire additional IRU in the amount of US$ 4.65. Bezeq International has not yet exercised this undertaking. G. As at December 31, 2018, the Bezeq Group companies have agreements for the acquisition of fixed assets, intangible assets, additional assets, and routine services amounting to NIS 392. H. For information about transactions with related parties, see Note 32. |
Securities, Pledges and Guarant
Securities, Pledges and Guarantees | 12 Months Ended |
Dec. 31, 2018 | |
Securities, Pledges and Guarantees [Abstract] | |
Securities, Pledges and Guarantees | Note 24 - Securities, Pledges and Guarantees The Bezeq Group’s policy is to provide tender, performance and legal guarantees. In addition, Bezeq provides bank guarantees, where necessary, for banking obligations of subsidiaries. A. The Bezeq Group companies have provided guarantees of NIS 158 in favor of the Ministry of Communications to secure the terms of their licenses (of which an amount of NIS 32 is linked to the CPI and NIS 37 is linked to the US$ exchange rate). B. The Bezeq Group companies have provided bank guarantees of NIS 109 in favor of third parties. C. In accordance with its cellular license, Pelephone is not permitted to sell, lease or pledge any of its assets used for the implementation of the license, without the consent of the Minister of Communications, except for: 1) A pledge on one of the license assets in favor of a bank operating lawfully in Israel, to receive bank credit, provided that it submitted notice to the Ministry of Communications regarding the pledge it intends to register, noting that the pledge agreement includes a clause ensuring that in any event, exercise of the rights by the bank will not impair, in any way, the services provided under the license. 2) Sale of items of equipment when implementing an upgrade, including sale of equipment by the trade-in method. D. For information about the conditions for loans and borrowings, see Note 15. |
Capital and Capital Reserves
Capital and Capital Reserves | 12 Months Ended |
Dec. 31, 2018 | |
Capital and Capital Reserves [Abstract] | |
Capital and Capital Reserves | Note 25 - Capital and Capital Reserves A. Equity Authorized Registered and paid up December 31 December 31 2017 and 2018 2017 and 2018 Number of shares Ordinary shares of NIS 0.1 par value each 50,000,000 29,889,045 On January 20, 2019, after the balance sheet date, the Company conducted a private placement of 7,385,600 of its ordinary shares, NIS 0.1 par value, to certain institutional, “qualified” and private investors in Israel. The Company received gross proceeds from the offering of approximately NIS 118, based on a price of NIS 16 per share. B. Dividend distributions On May 25, 2016, the Company’s Board of Directors declared a dividend of NIS 11.88 per share and NIS 355 in the aggregate. The payment date was June 29, 2016. |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2018 | |
Revenues [Abstract] | |
Revenues | Note 26 - Revenues Year ended December 31, 2016 2017 2018 NIS NIS NIS Domestic fixed line communications – Bezeq fixed-line Fixed line telephony 1,352 1,255 1,130 Internet - infrastructure 1,461 1,488 1,525 Transmission and data communication 835 775 769 Cloud and digital services 203 230 260 Other services 213 205 199 4,064 3,953 3,883 Cellular communications - Pelephone Cellular services and terminal equipment 1,777 1,743 1,713 Sale of terminal equipment 811 757 688 2,588 2,500 2,401 International communications, internet services and NEP – Bezeq international 1,480 1,467 1,338 Multi-channel television - DBS 1,745 1,650 1,473 Others 207 219 226 10,084 9,789 9,321 |
Salaries
Salaries | 12 Months Ended |
Dec. 31, 2018 | |
Salaries [Abstract] | |
Salaries | Note 27 - Salaries Year ended December 31, 2016 2017 2018 NIS NIS NIS Total salaries and incidentals 2,544 2,578 2,574 Less - salaries recognized in investments in property, plant and equipment and in intangible assets 529 571 579 2,015 2,007 1,995 |
General and Operating Expenses
General and Operating Expenses | 12 Months Ended |
Dec. 31, 2018 | |
General and Operating Expenses [Abstract] | |
General and Operating Expenses | Note 28 - General and Operating Expenses Year ended December 31, 2016 2017 2018 NIS NIS NIS Terminal equipment and materials 831 855 737 Interconnectivity and payments to domestic and international operators 825 805 789 Maintenance of buildings and sites* 605 584 286 Marketing and general expenses 706 610 570 Services and maintenance by sub-contractors 261 260 277 Vehicle maintenance expenses* 164 156 82 Content services expenses 629 636 653 4,021 3,906 3,394 * See Note 2.I.1 for information about early adoption of IFRS 16, Leases. Operating and general expenses are presented net of expenses of NIS 45 recognized in 2018 for investments in fixed assets and intangible assets (in 2017, NIS 65 and in 2016, NIS 64). |
Other Operating Expenses, Net
Other Operating Expenses, Net | 12 Months Ended |
Dec. 31, 2018 | |
Other Operating Expenses (Income), Net [Abstract] | |
Other Operating Expenses, net | Note 29 - Other Operating Expenses, net Year ended December 31, 2016 2017 2018 NIS NIS NIS Provision for severance pay in early retirement See note 20E 96 23 559 Provision for claims (4 ) 19 91 Capital gain from sale of property plant and equipment (86 ) (27 ) 1 Profit from sale of an associate - - (15 ) Others 15 5 (1 ) 21 20 635 |
Financing Expenses, Net
Financing Expenses, Net | 12 Months Ended |
Dec. 31, 2018 | |
Financing Expenses (Income) [Abstract] | |
Financing Expenses, Net | Note 30 - Financing Expenses, Net Year ended December 31 2016 2017 2018 NIS NIS NIS Income on bank deposits, investments and others (13 ) (2 ) (1 ) Change in fair value of financial assets measured at fair value through profit or loss (29 ) (7 ) (27 ) Income in respect of credit in sales, net of discount (42 ) (35 ) (30 ) Linkage and exchange rate differences, net (16 ) - - Other finance income (23 ) (25 ) (31 ) Total financing income (123 ) (69 ) (89 ) Interest expenses on financial liabilities 871 445 472 Linkage and exchange rate differences, net 38 48 64 Change in contingent consideration in a business combination 55 (14 ) 43 Change in fair value of financial assets measured at fair value through profit or loss 23 39 - Financing expenses for employee benefits, net 15 35 9 Financing expenses for lease commitments - - 26 Other financing expenses 52 33 6 Total financing expenses 1,054 586 620 Financing expense, net 931 517 531 |
Earnings (Loss) per Share
Earnings (Loss) per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings (Loss) per Share [Abstract] | |
Earnings (Loss) per Share | Note 31 - Earnings (Loss) per Share The calculation of basic and diluted earnings per share was based on income (loss) attributable to ordinary shareholders, and on a weighted average number of ordinary shares outstanding, calculated as follows: Year ended December 31 2016 2017 2018 NIS NIS NIS Earnings (loss) attributable to ordinary Shareholders Basic earnings (loss) for the year (236 ) 78 (1,029 ) Effect of diluted per share loss in a subsidiary - - - Diluted earnings (loss) for the year (236 ) 78 (1,029 ) Year ended December 31 2016 2017 2018 Thousands of Thousands of Thousands of shares of NIS 0.1 shares of NIS 0.1 Shares of NIS 0.1 par value par value par value Weighted average number of ordinary shares (basic and diluted) 29,889 29,889 29,889 |
Transactions with Related Parti
Transactions with Related Parties | 12 Months Ended |
Dec. 31, 2018 | |
Transactions with Related Parties [Abstract] | |
Transactions with Related Parties | Note 32 - Transactions with Related Parties A. Identity of related parties The Company's related parties are as defined in IAS 24 (2009) - Related Party Disclosures and include: Internet Gold, its ultimate parent Eurocom, other Eurocom Group companies, related parties of Eurocom, directors and key management personnel in the Company, Internet Gold, the Eurocom Group companies and persons who are close to a family member of any of these individuals. In the ordinary course of business, some of the Company's subsidiaries and affiliates engage in business activities with each other. Such business activities are primarily between Bezeq and its subsidiaries and between other Eurocom Group companies, such as Spacecom, Gilat Satcom and to a lesser extent other affiliated company. Such business activities primarily relate to the provision, purchase or sale of communications or digital services and products , The transactions among these related parties are made at prices and on terms equivalent to those charged in transactions with unrelated parties under similar conditions. Ordinary course of business transactions are aggregated in this Note. This Note also includes detailed descriptions of material related party transactions. It should be noted that the transactions described below with interested and related parties do not include reference to Note 1 regarding the investigation of the ISA and the Israel Police. B. Balances with related parties December 31, 2017 2018 NIS NIS Receivables - associates 8 7 Liabilities to related parties, net (23 ) 6 Advanced payment to Eurocom DBS (not including interest) for contingent consideration 99 99 C. Transactions with related parties Year ended December 31, 2016 2017 2018 NIS NIS NIS Revenues From associates 7 8 6 From related parties 13 23 31 Expenses To related parties 110 122 *54 To associates 2 5 5 Investments Related parties 59 28 1 Acquisition of DBS 55 **(70 ) - Revised fair value of the excess advance payments for acquisition of DBS - **56 **43 * Related-party expenses include amounts paid by DBS to Space Communications Ltd. ("Spacecom") up to May 3, 2018. It should be noted subsequent to this date, the Company believes, based on information it received, that Spacecom ceased to be a related party. In 2018, DBS paid a total of NIS 74 to Spacecom. ** Adjustment of the liability for contingent consideration for a business combination with DBS and adjustment of the fair value estimate of the amount expected to be returned to the Company from the excess of the advance payments that it paid, recognized as financing income, net. D. Transactions listed in section 270(4) of the Companies Law Approval date of the general meeting (after approval of Bezeq's audit committee and Board of Directors) Nature of the transaction Amount of the transaction December 8, 2015 – see (1) below Amendment to the framework agreement between Pelephone and Eurocom Cellular Communications Ltd, so that it will be extended to other products and brands, including related services for all products and its extension until December 31, 2018 (or three years after the acquisition date of any additional products or brands, whichever is earlier). Annual scope of up to NIS 50 (for all the products). June 30, 2016 – see (2) below Extension of the amended agreement of Bezeq with Eurocom Communications Ltd. ("Eurocom Communications") for ongoing management and consultation services for the Company for a period of three years. The management agreement was terminated on April 25, 2018. For the period between January 1, 2018 and April 25, 2018, an amount of NIS 800,000 was not paid and was offset against a debt. April 3, 2017 – see (3) below Approval of Bezeq vote at the general meeting of DBS in favor of the agreement between DBS and Space Communications Ltd. ("Spacecom" and "the Parties" respectively) with an amendment/addendum to the existing agreement between the parties dated November 4, 2013, for the lease of satellite segments in Spacecom's satellites ("the Agreement"), including in favor of implementation of the Agreement. The validity of the Agreement remains the same as the original agreement, namely, until the end of 2028. A total nominal cost of up to USD 263 for the entire term of the Agreement (until December 31, 2028), reflecting an average annual cost of USD 21.9. It should be noted that the overall cost of the Agreement may be lower if surplus revenue sharing mechanisms are applied and/or the assumptions set out in the amendment to the Agreement. For further information, see Note 23) The financial value of the transactions described above, which were carried out in 2018 were as follows: Amounts included in the consolidated financial statements NIS Expenses 28 (1) Bezeq has a personal interest in the transaction, since Eurocom Cellular Communications Ltd. (a party to the transaction), is controlled by Eurocom Communications, which is the ultimate controlling shareholder of Bezeq. (2) The management agreement stipulated that Eurocom Communications will provide the services of Shaul Elovitch, who will serve as executive chairman of the Board of Directors of the Company and its subsidiaries, with a position of 70%. In addition, it was determined that Eurocom Communications will provide directors on its behalf, to serve on the boards of directors of the Company and the subsidiary companies. Eurocom will also provide ongoing consulting services as follows: (A) directors' compensation, consisting of annual participation compensation and actual participation compensation based on a maximum amount for one meeting (as this term is defined in the Companies Regulations (Rules for Compensation and Expenses of an External Director), 2000), based on the relevant rating of the Company of the subsidiary/sub-subsidiary (as the case may be) at that date, for the participation of the directors serving on behalf of the Company's controlling shareholders, as part of their membership and their position as directors in the Company and/or its subsidiaries and the various committees, subject to adjustments in accordance with their number and presence at meetings; (B) NIS 3.5 per year for the service and activities of Shaul Elovitch as active chairman of the Board of Directors of the Company and its subsidiaries; and (C) NIS 432 thousand per year for ongoing consultation services. On July 26, 2018, Bezeq Board of Directors resolved that the provision of all components of the services under the Management Agreement was de facto discontinued on April 25, 2018, and determined the amount of NIS 800,000 due to Eurocom Communications from the Bezeq, for the period between January 1, 2018 and April 25, 2018 should not be paid, due to the restrictions imposed on the activities of Shaul Elovitch and other directors who serve or who served on the Board of Directors of Bezeq and its subsidiaries on behalf of Eurocom Communications in the reporting year, in connection with the investigation conducted by the ISA and the Israel Police. The amount was not paid to Eurocom Communications in practice but was deferred and offset against the debt of Eurocom Communications to Bezeq. (3) Bezeq had a personal interest in the transaction as at the date of its approval, since, as at the date of the transaction, Spacecom was controlled by Eurocom Communications, the ultimate controlling shareholder of Bezeq. To the best of the Company's knowledge and in accordance with information provided to the Company by Eurocom Communications, the link between Eurocom Communications and Spacecom has been severed, since the court appointed a receiver for the shares of Spacecom held by Eurocom Communications ("the Spacecom Shares under Receivership"), which holds the full voting rights, and in view of the fact that as Bezeq was informed, the value of the collateral held by the receiver, including the value of the Spacecom Shares under Receivership, does not exceed the amount of the debt underlying the appointment of the receiver. The Company both receives various services and products from, and provides various services and products to, related parties at market rates and in the ordinary course of business. Other than the transactions described below, none of these related party transactions are material to the Company or to the Company's related parties. If a related party wishes to supply products or services to the Company, the Company generally obtain a bid from a third party to enable us to determine whether the related party's bid is on arm's-length terms. Any of such transaction is subject to the approval of the Company's audit committee and the Company's board of directors (and in some circumstances, The Company's shareholders). In addition, generally the Company will not purchase a particular type of product or service solely from related parties but will also have non-related vendors. Prices offered by non-related vendors are compared to those offered by related parties to ensure that the related parties are offering arm's length terms. In the ordinary course of business, some of the Company's subsidiaries and affiliates engage in business activities with each other. Such business activities are primarily among Bezeq, other Bezeq Group companies and Eurocom Group companies, such as Eurocom Digital, Eurocom Cellular, Spacecom, Satcom, and to a lesser extent other affiliated companies. Such business activities primarily relate to the provision, purchase or sale of communications and digital services and products, including the provision of satellite or broadcasting services, cellular and electronic products and equipment, and Internet and telephony services. The transactions among these related parties are made at prices and on terms equivalent to those charged in transactions with unrelated parties under similar conditions. 1. In February 2008, the Company entered into an execution services agreement with Eurocom Capital Finance Ltd. ("Eurocom Capital"), under which Eurocom Capital handled the execution of the Company's financial investments pursuant to direct instructions from our Chief Executive Officer. The Company paid Eurocom Capital aggregate fees of NIS 288 thousand and NIS 110 thousand for its services in 2016 and 2017, respectively. The execution services agreement with Eurocom Capital was terminated on November 30, 2017 and no payments were made in 2018. 2. The Company entered into an arrangement with Internet Gold according to which the Company's employees provide services to both companies and the Company will pay 2/3 and Internet Gold will pay 1/3 of their compensation. 3. The Company and Internet Gold together leased their principal offices from Eurocom Holdings for an annual rent of NIS 110 thousand for both companies. The offices were sold by Eurocom Holdings to a third party in November 2018 and the Companies continue to rent their principal offices from the new owner at the same terms. 4. In June 2017, the Company's shareholders approved the company's entering into a Services Agreement with Eurocom Communications pursuant to which it will provide the Company with the services of its Legal Department in consideration of a monthly fee of NIS 20 thousand, plus an annual fixed amount of up to NIS 8 thousand in respect of various other expenses to be paid against receipts and documentation. Based on our prior experience, we estimated that the scope of the legal services provided to the company averaged approximately 60 hours per month on an annual basis. The legal services' portion of the Services Agreement was terminated on March 31, 2018. 5. In February 2018, our Board of Directors appointed Adv. Ami Barlev to serve as a director and as Acting Chairman of the Company's Board of Directors until the next annual shareholders' meeting. In January 2019, Adv. Barlev, was appointed as the new Chief Executive Officer of the Company replacing Doron Turgeman. In addition, Mr. Shlomo Zohar, a director of our company, was appointed to serve as Chairman of the Board instead of Mr. Barlev, who continued to serve as a director. 6. In March 2018, Eurocom and the Company terminated the rest of the Services Agreement. The Company's Compensation Committee and Board of Directors have confirmed, among other things, that upon termination of the Services Agreement, Messrs. Or Elovitch and Ami Barlev will be entitled to compensation as directors pursuant to the "Fixed" statutory amount in accordance with the Companies Regulations (Rules Regarding Compensation and Expenses for an External Director) 5760-2000 for companies within the range of the Company's size. In addition, the directors will be entitled to receive reimbursement of expenses in accordance with the provisions of these Compensation Regulations, to receive coverage under the insurance policy that applies to all of the Company's directors and officers, and to receive indemnification letter as given to all of the Company's directors and officers. Mr. Barlev's compensation is effective starting February 7, 2018. The compensation of Mr. Or Elovitch is effective starting April 1, 2018. Mr. Or Elovich resigned as a director of the Company in August 2018. 7. Key management personnel compensation comprised: Year ended December 31 2016 2017 2018 NIS NIS NIS Employee benefits 2 2 2 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 33 - Subsequent Events A. On March 13, 2019, Bezeq’s Board of Directors approved a resolution of the Board of Directors of DBS to approve a plan for migration from satellite broadcasts to broadcasts over the internet, in a gradual, process that is expected to continue over several years. B. On March 14, 2019, DBS signed a collective arrangement with the Histadrut Federation of Labor and the employees’ representatives regarding retrenchment and synergy procedures, commencing on June 1, 2010 until December 31, 2021 (“the Arrangement”). During the term of the arrangement, DBS will be entitled to terminate the employment of up to 325 employees and employees who are not included in the retirement plan will receive a one-time grant. The estimated cost of the Arrangement is NIS 68, assuming full exercise of the rights of DBS to retrench and the fulfilment of conditions for providing additional financial benefits to the employees. In addition, according to the Arrangement, DBS may also retrench by not recruiting employees to replace employees whose employment has terminated. C. On March 27, 2019, Bezeq Board of Directors approved the filing of an application for a permit to publish a prospectus for completion, based on its financial statements as at December 31, 2018, together with a first draft of a prospectus that includes an option for an exchange tender offer for Bezeq traded debentures and the issuance of new debentures of the Bezeq. D. In March 2019, the Company announced that the aggregate material decline in the assets and the accounting equity of the company is expected to be in a cumulative range of NIS 700-800 (as a result of all the write downs to date). The Company’s Board of Directors decided at its meeting held on the evening of March 19, 2019, that as a result of the foregoing to enter into a dialogue with the holders of its debentures in order to examine financial possibilities for strengthening the Company’s shareholders’ equity or to obtain adjustments to the current Deeds of Trust governing the debentures. The Company’s Board of Directors further determined to withhold payments to its financial creditors until such agreements are finalized. This withholding led to significant discussions with its debenture holders who are now being consulted on every future move of the Company while attempts to resolve the current financial predicament. In view of the above circumstances, the Company decided to classify the non-current portion of its debentures as current maturities in the financial statements, taking into account the following reasons: In the Company’s position, if the events described above were known to Internet Gold and B Communications on December 31, 2018 it would result in the immediate repayment of the Company’s debentures - at that time, due to the following: 1. The “deep” violation of covenants and a significant deterioration that couldn’t be “cured” within a period of a few months. 2. The above circumstances are in fact a material deterioration and a presumption that such deterioration constitute grounds for the repayment of the debt. For example, in the current market conditions and those that prevailed in December 2018, capital raising that would have enabled the “cure” of the covenants of the Company, i.e. about NIS 400, would be an uncertain challenge and not necessarily applicable in a short period of time. 3. In addition, if the above events were known in December 2018 and would have been reported to the public, it is reasonable to assume that the Company would have encountered a clear difficulty in raising cash to remedy the violations within a reasonable time. 4. In addition, during December 2018, Internet Gold was at the peak of a “process” for the sale of its shares in the Company, and it is reasonable to assume that the above events would at least have caused a material change in the prospects and a reduction in the consideration to be paid for the Company’s shares, which would have led to the establishment of grounds for default and early repayment cause with the debenture holders. For example, in January 2019, Internet Gold reported receipt of offers for B Communications shares in an amount that was insufficient for the Company to pay its liabilities, even before the events described above were known. Had these above-mentioned events been reported in December, it is reasonable to assume that the proposals would have been significantly lower or even delayed or cancelled. These significant accounting and economic events could not be cured within a reasonable time period or within the healing period, even if they were known on December 31, 2018. E. During January 2019, Midroog downgraded the rating of the Company’s debentures (Series B and C) twice by two notches from A2.il to Baa2.il and retained the rating outlook of credit review with negative implications. In March 2019, following the decision of the Company’s Board of Directors decision to withhold payments to its financial creditors, Midroog downgraded the rating of the debentures (Series B and C) from Baa2.il to Caa2.il and changed the rating outlook to credit review with uncertain trajectory. The downgrades reflect Midroog’s assessment of a high certainty of default (as defined by Midroog standards). According to the indenture of the Series C debentures, as a result of the rating downgrade mentioned above, the annual coupon of the Series C debentures will increase by 1% to 4.6%. In addition, as a result of the Company’s equity attributable to shareholders decrease to below the threshold of NIS 750 as mentioned in the indenture of the Series C debentures for two consecutive quarters starting December 31, 2018, the annual coupon of the Series C debentures will increase by additional 0.25% to 4.85%. F. On May 5, 2019, the Sakia property sale was completed and Bezeq received NIS 377 (including VAT), representing the entire balance of the consideration for the property. As a result, Bezeq is expected to record a capital gain in its financial statements for the second quarter of 2019. The capital gain that will be recorded under the assumption that Bezeq will be obliged to pay the full permit fees and improvement levy is NIS 250, compared with NIS 450 in case all of Bezeq’s claims in its objections are accepted. Bezeq is still assessing the capital gain to be recorded in its financial statements. G. For issuance of the Company’s ordinary shares after the balance sheet date, please refer to Note 25A. H. In April 2019, TRYMG International Communications Ltd. (formerly Zeevi International Communications Ltd.), a company owned by Mr. Gad Zeevi, as well as Searchlight Capital Partners, or SCP submitted two different and competitive offers for the purchase of Internet Gold’s shares in the Company and for additional investment in the Company. SCP offer was chosen by the holders of Internet Gold’s debentures for the purpose of promoting a transaction and received limited time exclusivity. Both offers are subject to various terms. While Internet Gold’s debenture holders decided to advance the SCP proposal (and grant SCP exclusivity), TRYMG submitted to the Company an offer for an investment of NIS 950 for issuance of the Company’s shares. The offer is subject to various terms. At this stage, the holders of the debentures of the two companies, and the companies themselves, examine the proposals. SCP offer was due to expire on May 10, 2019, but following advanced negotiations among the Company, SCP and Internet Gold (as well as the debenture holders of the Company and Internet Gold), the deadline for approval of the transaction (as set by SCP) has been extended by a week (i.e. until May 17, 2019). On May 14, 2019, an updated offer was received from SCP for the purchase of the controlling shares in the Company while executing a cash investment in the Company in the total amount of NIS 640. The offer is subject, inter alia At this stage, this proposal is the main proposal promoted by the parties. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Significant Accounting Policies [Abstract] | |
Consolidation of the financial statements | 3.1 Consolidation of the financial statements 3.1.1 Subsidiaries Subsidiaries are entities controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date of loss of control. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the acquire and it has the ability to affect those returns through its power over the acquire. Substantive rights held by the group and others are considering when assessing control. 3.1.2 Transactions eliminated on consolidation Intra-group balances and income and expenses arising from intra-group transactions, are eliminated in the consolidated statements. 3.1.3 Contingent consideration for business combinations Subsequent to the acquisition date, the Group recognizes changes in fair value of contingent consideration recognized under business combinations, classified as a financial liability in the statement of income under financing expenses. 3.1.4 Non-controlling interests According to the Group's accounting policy with respect to transactions with non-controlling interests, while retaining control, the difference between the consideration paid or received for change in non-controlling interests is recognized in retained earnings. 3.1.5 Allocation of impairment loss to non-controlling interests If an impairment loss allocated to non-controlling interests relates to goodwill that was not recognized in the consolidated financial statements, the impairment is not recognized as an impairment loss on goodwill. In such cases, only an impairment loss relating to goodwill that was allocated to the owners of the Company is recognized as an impairment loss on goodwill. For purposes of goodwill impairment testing, when the non-controlling interests are initially measured according to their relative share of the acquiree's net identifiable assets, the carrying amount of the goodwill is adjusted according to the share which the Group holds in the cash-generating unit to which the goodwill is allocated. |
Foreign currency transactions | 3.2 Foreign currency transactions Transactions in foreign currency are translated into the functional currency of the Group at the exchange rate on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies on the reporting date are retranslated to the functional currency at the exchange rate at that date. |
Financial instruments | 3.3 Financial instruments 3.3.1 As from January 1, 2018, the Group applies IFRS 9, Financial Instruments ("IFRS 9"). The application of IFRS 9 did not have a material effect on the measurement of the Group's financial instruments in 2018, compared to the provisions in the previous standard, and the main effect of application of IFRS 9 in the Group is the use of the expected credit loss model. 3.3.2 Non-derivative financial assets Non-derivative financial assets comprise mainly investments in deposits, trade and other receivables, and cash and cash equivalents. The Group initially recognizes financial assets at the date at which the Group becomes a party to contractual provisions of the instrument, meaning the date that the Group undertakes to buy or sell the asset. A financial asset is initially measured at fair value plus transaction costs that are directly attributable to the acquisition or issuance of the financial asset. A trade receivable without a significant financing component is initially measured at the transaction price. Financial assets are derecognized when the contractual rights of the Group to the cash flows from the asset expire, or the Group transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Classification of financial assets into categories and the accounting treatment in each category Financial assets are classified at initial recognition to one of the following measurement categories: amortized cost; or fair value through profit or loss. A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated at fair value through profit or loss: A. It is held within a business model whose objective is to hold assets so as to collect contractual cash flows. B. The contractual terms of the financial asset give rise to cash flows representing solely payments of principal and interest on the principal amount outstanding on specified dates. All financial assets of the Group that are not classified as measured at amortized cost are measured at fair value through profit or loss. The Group classifies its financial assets as follows: Cash and cash equivalents Cash comprises cash balances available for immediate use and call deposits. Cash equivalents comprise short-term highly liquid investments (with original maturities of three months or less) that are readily convertible into known amounts of cash and are exposed to insignificant risks of change in value. Trade and other receivables and deposits The Group has balances of trade and other receivables and deposits that are held within a business model whose objective is collecting contractual cash flows. The contractual cash flows of these financial assets solely represent payments of principal and interest that reflects consideration for the time value of money and the credit risk. Accordingly, these financial assets are measured at amortized cost. Subsequent measurement and gains and losses Financial assets at amortized cost are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss. Financial assets at fair value through profit or loss are subsequently measured at fair value. Net gains and losses, including any interest income or dividend income, are recognized in profit or loss. 3.3.3 Non-derivative financial liabilities Non-derivative financial liabilities include debentures issued by the Group, loans and borrowings from banks and other credit providers, and trade and other payables. The Group initially recognizes debt instruments as they are incurred. Financial liabilities are recognized initially at fair value less any attributable transactions costs. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. Financial liabilities are derecognized when the obligation of the Group, as specified in the agreement, expires or when it is discharged or canceled. Change in terms of debt instruments An exchange of debt instruments having substantially different terms, between an existing borrower and lender are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability at fair value. The entire difference between the amortized cost of the original financial liability and the fair value of the new financial liability is recognized in profit or loss as a financing income or expense. The terms are substantially different if the discounted present value of the cash flows according to the new terms, including any commissions paid, less any commissions received and discounted using the original effective interest rate, is different by at least ten percent from the discounted present value of the remaining cash flows of the original financial liability. 3.3.4 CPI-linked assets and liabilities that are not measured at fair value The value of CPI-linked financial assets and liabilities, which are not measured at fair value, is revaluated in each period according to the actual increase in the CPI. 3.3.5 Offsetting financial instruments Financial assets and liabilities are offset, and the net amount presented in the statement of financial position when, and only when, the Group currently has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. 3.3.6 Hedge accounting The Group holds derivative financial instruments to hedge cash flows for risks to future changes in the CPI in respect of the debentures issued by the Group. At the inception of the hedging relationship, the Group documents its risk management objective and its hedging strategy. The Group also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and the hedging instrument are expected to offset each other. Derivatives are recognized initially at fair value. Attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and the effective portion of changes in fair value of the hedging instrument is recognized in a hedge reserve under other comprehensive income. The effective portion of changes in fair value of a derivative, recognized in other comprehensive income, is limited to the cumulative change in fair value of the hedged item (based on present value), from inception of the hedge. The change in fair value in respect of the ineffective portion is recognized immediately in profit or loss. 3.3.7 Economic hedges In addition, the Group holds derivative financial instruments to hedge cash flows for foreign currency risks. Hedge accounting is not applied for these instruments. The derivative instruments are recognized at fair value; changes in fair value are recognized in profit and loss as incurred, as a financing income or expense 3.3.8 Share capital a. Ordinary shares Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity. b. Treasury shares When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is carried to share premium. |
Broadcasting rights | 3.4 Broadcasting rights Broadcasting rights are stated at cost, net of rights exercised and impairment losses. The costs of broadcasting rights acquired for the broadcasting of content include the amounts paid to the rights provider, plus direct costs for adjusting the rights to the broadcast. Broadcast rights are amortized in accordance with the actual broadcasts of the total number of expected broadcasts based on the management's estimate or broadcasts permitted under the agreement (the part that is unamortized at the end of the agreement term is amortized in full upon its termination), or on a straight line basis in accordance with the term of the rights agreement or the economic life, whichever is shorter. Broadcasting rights are assessed for impairment as part of the cash-generating unit to which the broadcasting rights are attributed. The net adjustment of the broadcasting rights is presented as an adjustment of earnings as part of the ongoing operations in the statements of cash flows. |
Property, plant and equipment | 3.5 Property, plant and equipment 3.5.1 Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labor and financing costs as well as any other cost directly attributable to bringing the asset to the condition for its use intended by the management, and the estimated costs of dismantling and removing the items and restoring the site on which they are located when the Group has an obligation to vacate and restore the site. The cost of purchased software that is integral to the functionality of the related equipment is recognized as part of the cost of the equipment. Spare parts, servicing equipment and stand-by equipment are classified as fixed assets when they meet the definition of fixed assets in IAS 16, and are otherwise to be classified as inventory. When major parts of the fixed assets have different useful lives, they are accounted for as separate items (major components) of the fixed assets. Gain or loss from the disposal of a fixed asset item is determined by comparing the proceeds from disposal of the asset with it carrying amount. Gain or loss from the sale of fixed assets is recognized under other income or other expenses, as the case may be, in the statement of income. 3.5.2 Subsequent expenditure The cost of replacing part of a fixed asset item is recognized in the carrying amount of the item if it is probable that the future economic benefit embodied in the new item will flow to the Group and its cost can be measured reliably. The costs of day-to-day servicing are recognized in the statement of income as incurred. 3.5.3 Depreciation Depreciation is recognized in the statement of income on a straight-line basis over the estimated useful life of each part of a fixed asset item, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets under finance lease agreements are depreciated over the shorter of the lease term and their useful lives. An asset is depreciated when it is ready for use, meaning when it reaches the location and condition necessary for it to be capable of operating in the manner intended by management. Leasehold improvements are generally depreciated over the shorter of the lease term, including the extension option held by the Group and intended to be exercised and the useful life of the leasehold improvements. The estimated useful lives for the current period are as follows: Years Fixed line and international network equipment (switches, transmission, power) 4-12 Network 12-33 Subscriber equipment and installations 4-8 Equipment and infrastructure for multichannel television 3-15 Vehicles 6-7 Office and general equipment 5-10 Electronic equipment, computers and internal communication systems 3-7 Cellular network 4-10 Passive radio equipment at cellular network sites up to December 31, 2037 Buildings 25 Seabed cable 4-25 (mainly 25) Depreciation methods, useful lives and residual values are reviewed at least at each reporting year and adjusted as required. |
Intangible assets | 3.6 Intangible assets (1) Goodwill and brand names Goodwill and brand names that arise upon the acquisition of subsidiaries are included in intangible assets. Subsequent to initial recognition, brand name (Bezeq CGU, Bezeq International CGU and Pelephone CGU) and goodwill are measured at cost less accumulated impairment losses. Goodwill and brand names are measured at least once a year to assess impairment. (2) Software development costs Software development costs are recognized as an intangible asset only if the development costs can be measured reliably; the software is technically and commercially feasible; and the Group has sufficient resources to complete the development and intends to use the software. The costs recognized as an intangible asset include the cost of the materials, direct labor and overhead expenses directly attributable to preparation of the asset for its intended use. Other development costs are recognized in the statement of income as incurred. Capitalized development costs are measured at cost less amortization and accumulated impairment losses. ( 3) Software Software that is an integral part of the hardware, which cannot function without the programs installed on it, is classified as property, plant and equipment. However, licenses for stand-alone software, which adds functionality to the hardware, is classified (mainly) as intangible assets. (4) Rights to frequencies Rights to frequencies refer to frequencies assigned to Pelephone for cellular activities, after it won the dedicated tenders of the Ministry of Communications. Depreciation of the asset is recognized in the statement of income on the straight-line method over the term of the allocation of frequencies, which started from the use of the frequencies. The 4G frequencies (LTE) and 3G frequencies (UMTS/HSEA) are amortized until August 22, 2028. (5) Other intangible assets Other intangible assets acquired by the Group, which have a definite useful life, are measured at cost less amortization and accumulated impairment losses. (6) Subsequent expenditures Subsequent expenditures are recognized as intangible assets only when they increase the future economic benefits embodied in the specific asset to which they relate. All other expenditures, including expenditures relating to generated goodwill and brands, are recognized in the statement of income as incurred. (7) Amortization Amortization, except for goodwill, brand names (excluding brands acquired in the DBS business combination) and customer relationships, is recognized in the statement of income on a straight-line basis over the estimated useful life of the intangible assets, from the date on which the assets are available for use. Goodwill and brand names are not systematically amortized but are tested for impairment at least once a year. Customer relationships are amortized according to the economic benefit expected from those customers each period based on their expected churn rate, which results in accelerated amortization during the early years of the relationship. Estimated useful lives for the current and comparative periods are as follows: Type of asset Amortization period Frequency usage rights Over the term of the license up to 2028 Computer programs and software licenses 3 - 10 years according to the term of the license or the estimated time of use of the software Customer relationships 5 - 7 years based on the estimated customer churn rate (using the accelerated depreciation method) Brand acquired in a business combination 12 Amortization methods and useful lives are reviewed at least once a year and adjusted if appropriate. |
Leased assets | 3.7 Leased assets 3.7.1 As set out in Note 2.I.1 above, as from January 1, 2018, the Group early applies IFRS 16, Leases. 3.7.2 Accounting policy applied in the periods prior to January 1, 2018 Leases, including leases of land from the Israel Land Administration, where the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are measured at cost less accumulated amortization and impairment losses. Other leases are classified as operating leases and the leased assets are not recognized in the Group's statement of financial position. Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease. At inception or upon reassessment of an arrangement, the Group determines whether such an arrangement is or contains a lease. An arrangement is a lease or contains a lease if the following two criteria are met: A. The fulfillment of the arrangement is dependent on the use of a specific asset or assets. B. The arrangement contains rights to use the asset. If, in accordance with these terms, the Group determines that the agreement does not contain a lease, the agreement is accounted for as a service agreement and payments for the service are recognized in profit or loss on a straight-line basis, over the service period. 3.7.3 Accounting policy applied as from January 1, 2018 Presented below are the principal accounting policies for leases in which the Group is the lessee, which were applied as from January 1, 2018 following the application of the Standard: 3.7.4 Determining whether an arrangement contains a lease At the inception of the arrangement, the Group determines whether the arrangement is or contains a lease and examines whether the arrangement transfers the right to control the use of an identifiable asset for a period of time in return for payment. When assessing whether the arrangement transfers control over the use of an identifiable asset, the Group estimates, over the lease term, whether it has both rights set out below: A. The right to essentially obtain all the economic rewards associated with the use of the identifiable asset. B. The right to direct the use of the identifiable asset. For lease contracts that include non-lease components, such as services or maintenance, which are related to a lease component, the Group elected to account for the contract as a single lease component without separating the components. Leased assets and lease liability Contracts that award the Group the right to control the use of an identifiable asset over a period of time for a consideration are accounted for as leases. At initial recognition, the Group recognizes a liability at the present value of the future minimum lease payments (these payments do not include variable lease payments that are not linked to the CPI, or to any change in the rate of interest, or any change in the exchange rate), and concurrently, the Group recognizes a right-of-use asset at the amount of the liability, adjusted for lease payments paid in advance or accrued, plus direct costs incurred in the lease. Since the interest rate implicit in the lease is not readily determinable, the incremental borrowing rate of the Group is used (the borrowing rate that the Group would be required to pay to borrow the amounts required to obtain an asset at a similar value to the right-of-use asset in a similar economic environment, in a similar period and with similar collateral). Subsequent to initial recognition, the asset is accounted for using the cost model and it is amortized over the lease term or the useful life of the asset (whichever is earlier). The lease terms The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option if it is reasonably certain that the Group will exercise or not exercise the option. Variable lease payments Variable lease payments that are linked to the CPI are initially measured using the index or currency rate at the inception of the lease and are included in the measurement of the lease liability. When there is a change in the cash flows of the future lease payments arising from the change in the index, the liability is adjusted against the right-of-use asset. Depreciation of a right-of-use asset After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation and accumulated impairment losses and is adjusted for re-measurements of the lease liability. Depreciation is calculated on a straight-line basis over the useful life or contractual lease period, whichever earlier, as follows: Type of asset Weighted average of depreciation period as at January 1, 2018 (years) Cellular communications sites 6.5 Buildings 7 Vehicles 2 Subleases In leases in which the Group sublets the underlying asset, the Group assesses the classification of the sublease as a finance or operating lease, for the right-of-use received in the primary lease. The Group assessed the existing subleases on the initial application date, in accordance with the balance of their contractual terms as at that date. |
Investment property | 3.8 Investment property Investment property is measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the investment property. |
Right of use of capacities | 3.9 Right of use of capacities Transactions for acquiring an indefeasible right of use of submarine communication cable capacities are mostly accounted for as service transactions. The prepaid expense is amortized on a straight-line basis as stated in the agreement, but for no longer than the expected estimated useful life of those capacities. Identifiable capacities which serve the Bezeq Group exclusively meet the definition of a finance lease and are recognized in property, plant and equipment. The asset is depreciated on a straight-line basis as stated in the agreement, but for no longer than the expected estimated useful life of those capacities. |
Inventory | 3.10 Inventory The cost of inventories includes the cost of purchase and cost incurred in bringing the inventories to their present location and condition. Inventories are measured at the lower of cost or net realizable value. The Group elected to base the cost of inventories on the moving average principle. The inventories include terminal equipment and accessories intended for sale and service, as well as spare parts used for repairs in the repair service provided to its customers. Slow-moving inventory of terminal equipment, accessories and spare parts are stated net of the provision for impairment. |
Impairment | 3.11 Impairment 3.11.1 Non-derivative financial assets As set out in section 3.3 above, as from January 1, 2018, the Group applies IFRS 9, Financial Instruments ("IFRS 9") and performs an assessment for any indications of impairment in accordance with IFRS 9. As set out in Note 2.I.2, in practice, application of the New Standard did not have a material effect on the measurement of impairment of the Group's financial assets in 2018 compared with the previous standard. The Group has elected to measure the provision for expected credit losses in respect of trade receivables at an amount equal to the full lifetime credit losses of the instrument. Lifetime expected credit losses are expected credit losses that result from all possible default events over the expected life of the financial instrument. Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive. Expected credit losses for receivables in significant amounts are tested individually. Other financial assets are assessed for expected credit losses collectively in groups that share similar credit risk characteristics, taking into account past experience. The provision for expected credit losses is recognized net of the gross carrying amount of the receivables. For bank deposits, for which credit risk did not increase significantly from the date of initial recognition, the Group measures the provision for expected credit losses in an amount equal to the expected credit losses in respect of an event of default in a 12 month period. When determining whether the credit risk of a financial asset has increased significantly since initial recognition, and when estimating expected credit losses, the Group considers reasonable and supportable information that is relevant and available with no undue cost or effort. Such information includes quantitative and qualitative information, and an analysis, based on the Group's past experience and informed credit assessment, and it includes forward looking information. 3.11.2 Non-financial assets Timing of impairment testing The carrying amounts of the Group's non-financial assets, other than inventory and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the recoverable amount of the asset is estimated. The Group assesses the recoverable amount of goodwill and brand name once a year, or more frequently if there are indications of impairment. Measurement of recoverable amount The recoverable amount of an asset or cash-generating unit is the greater of its value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit, for which the estimated future cash flows from the asset or cash-generating unit (for which future cash flows were not adjusted). Determining cash-generating units For the purpose of impairment testing, the assets are grouped together into the smallest group of assets that generates cash from continuing use that are largely independent of other assets or groups of assets ("cash-generating unit"), see Note 9. Allocation of goodwill to cash-generating units For purposes of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes, but in any event is not larger than an operating segment. Goodwill acquired in a business combination is allocated to cash-generating units that are expected to generate benefits from the synergies of the combination. Recognition of impairment loss An impairment loss is recognized if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. As regards cash-generating units that include goodwill, an impairment loss is recognized when the carrying amount of the cash-generating unit, after including the balance of goodwill, exceeds its recoverable amount. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the cash-generating unit on a pro rata basis. To allocate an impairment loss, the assets are not impaired below the higher of their fair value less exercise costs and their value in use (if determinable) or zero. See Note 12. |
Employee benefits | 3.12 Employee benefits 3.12.1 Post-employment benefits The Group has a number of post-employment benefit plans. The plans are usually financed by deposits with insurance companies and they are classified as defined contribution plans and defined benefit plans. A. Defined contribution plans A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. The Group's obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in the statement of income in the periods during which services are rendered by employees. B. Defined benefit plans The Group's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is presented at its present value, and the fair value of any plan assets is deducted. The calculation is performed annually by a qualified actuary. The discount rate is the yield at the reporting date on high-quality linked corporate debentures denominated in NIS, with maturity dates approximating the terms of the Group's obligations. Net interest costs on a defined benefit plan are calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability. The Group elected to recognize the interest costs that were recognized in profit or loss under financing expenses. Remeasurement of the net defined benefit liability comprises actuarial gains and losses and the return on plan assets (excluding interest). Remeasurements are recognized immediately directly in retained earnings When the benefits of a plan are improved or curtailed, the portion of the increased benefit relating to past service by employees or the gain or loss on curtailment are recognized immediately in profit or loss when the plan improvement or curtailment occurs. 3.12.2 Other long-term employee benefits The Group's net obligation in respect of long-term employee benefits other than pension plans is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The amount of these benefits is stated at its present value. The discount rate is the yield at the reporting date on high-quality linked corporate debentures denominated in NIS, with maturity dates approximating the terms of the Group's obligations. Any actuarial gains or losses are recognized in the statement of income in the period in which they arise. Any actuarial changes arising from a change in the discount rate are recognized in the financing expenses item, while the other differences are recognized in salary expenses. 3.12.3 Benefits for early retirement and dismissal Termination benefits are recognized as an expense when the Group is committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date. Termination benefits for voluntary redundancies are recognized as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. 3.12.4 Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. The employee benefits are classified, for measurement purposes, as short-term benefits or as other long-term benefits depending on the date when the benefits are expected to be to be wholly settled. In the statement of financial position, the employee benefits are classified as current benefits or as non-current benefits according to the time the liability is due to be settled. |
Provisions | 3.13 Provisions A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is more likely than not that an outflow of economic benefits will be required to settle the obligation. 3.13.1 Legal claims Contingent liabilities are accounted for according to IAS 37 and its related provisions. Accordingly, the claims are classified by likelihood of realization of the exposure to risk, as follows: a. More likely than not - more than 50% probability b. Possible - probability higher than unlikely and less than 50% c. Remote - probability of 10% or less For claims which the Group has a legal or constructive obligation as a result of a past event, which are more likely than not to be realized, the financial statements include provisions which, in the opinion of the Group, based, among other things, on the opinions of its legal advisers retained in respect of those claims, are appropriate to the circumstances of each case, despite the claims being denied by the Group companies. There are also a few recently filed legal proceedings for which the risks cannot be assessed at this stage, therefore no provisions have been made. Note 22 describes the amount of additional exposure due to contingent liabilities that are likely to be realized. 3.13.2 Site restoration and clearing costs A provision in respect of an obligation to restore and clear sites is recognized for those rental agreements where the Group has an undertaking to restore the rental property to its original state at the end of the rental period, after dismantling and transferring the site, and restoring it as necessary. The provisions are determined by discounting the expected future cash flows. The carrying amount of the provision is adjusted each period to reflect the time that has passed and is recognized as a financing expense. 3.13.3 Onerous contracts A provision for onerous contracts is recognized when the unavoidable costs of a contract exceed the benefits expected to be received from the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the unavoidable costs (net of the revenues) of continuing with the contract. Unavoidable costs are costing the Group cannot avoid as they are subject to a contract (such as incremental costs). |
Revenues | 3.14 Revenues 3.14.1 As from January 1, 2017, the Group has early adopted IFRS 15, Revenue from Contracts with Customers ("IFRS 15" or "the Standard"). The application of IFRS 15 did not have a material effect on the measurement of the Group's revenue in 2017, compared to the provisions in the previous standard, and the main effect of application of IFRS 15 in the Group is the accounting treatment of incremental costs of obtaining a contract with a customer. The model for recognizing revenue from contracts with customers includes five steps for analyzing transactions in order to determine when to recognize revenue and in what amount: A. Identifying the contract with the customer. B. Identifying separate performance obligations in the contract. C. Determining the transaction price. D. Allocating the transaction price to separate performance obligations. E. Recognizing revenue when the performance obligations are satisfied. The Group recognizes revenue when the customer gains control over the goods or services. The income is measured according to the amount of the consideration to which the Group expects to be entitled in exchange for the transfer of goods or services promised to the customer, other than amounts collected in favor of third parties. 3.14.2 Identifying the contract The Group accounts for a contract with a customer only when the following conditions are met: A. The parties to the contract have approved the contract (in writing, orally or according to other customary business practices) and they are committed to satisfying the obligations attributable to them. B. The Group can identify the rights of each party in relation to the goods or services that will be transferred. C. The Group can identify the payment terms for the goods or services that will be transferred. D. The contract has a commercial substance (i.e. the risk, timing and amount of the entity's future cash flows are expected to change as a result of the contract). E. It is probable that the consideration, to which the Group is entitled to in exchange for the goods or services transferred to the customer, will be collected. 3.14.3 Identifying performance obligations On the contract's inception date, the Group assesses the goods or services promised in the contract with the customer and identifies as a performance obligation any promise to transfer to the customer one of the following: 1. Goods or services (or a bundle of goods or services) that are distinct; or 2. A series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. 3.14.4 Determining the transaction price The transaction price is the amount of the consideration to which the Group expects to be entitled in exchange for the transfer of goods or services promised to the customer, other than amounts collected in favor of third parties. When determining the transaction price, the Group takes into account the effects of all the following: variable consideration, the existence of a significant financing component in the contract, non-cash consideration and consideration to be paid to the customer. 3.14.5 Existence of a significant financing component In order to measure the transaction price, the Group adjusts the amount of the promised consideration in respect of the effects of the time value of money if the timing of the payments agreed between the parties provides to the customer or the Group a significant financing benefit. In these cases, the contract contains a significant financing component. When assessing whether a contract includes a significant financing component, the Group examines, among other things, the expected length of time between the date the Group transfers the promised goods or services to the customer and the date the customer pays for these goods or services, as well as the difference, if any, between the amount of the consideration promised and the cash selling price of the promised goods or services. When the contract contains a significant financing component, the Group recognizes the amount of the consideration using the discount rate that would be reflected in a separate financing transaction between it and the customer on the inception date of the contract In cases where the difference between the time of receiving payment and the time of transferring the goods or services to the customer is one year or less, the group applies the practical expedient included in the standard and does not separate a significant financing component. 3.14.6 Existence of performance obligation Revenue is recognized when the Group satisfies a performance obligation by transferring to the customer control over promised goods or services. 3.14.7 Contract costs Incremental costs of obtaining a contract with a customer such as sales fees to agents, are recognized as an asset when the Group is likely to recover these costs. Costs to obtain a contract that would have been incurred regardless of the contract are recognized as an expense as incurred, unless the customer can be billed for those costs. Capitalized costs are amortized in the income statement on a systematic basis that is consistent with the average projected churn rate of subscribers based on the type of subscriber and the service received (mainly over a period of 1 month to 4 years). Every reporting period the Group examines whether the carrying amount of the asset recognized as aforesaid exceeds the consideration the entity expects to receive in exchange for the goods or services to which the asset relates, less the costs directly attributable to the provision of these goods or services that were not recognized as expenses, and if necessary an impairment loss is recognized in profit or loss. 3.14.8 Principal supplier or agent When another party is involved in providing goods or services to the customer, the Group examines whether the nature of its promise is a performance obligation to provide the defined goods or services itself, which means the Group is a principal and therefore recognizes revenue in the gross amount of the consideration, or to arrange that another party provide the goods or services which means the Group is an agent and therefore recognizes revenue in the amount of the net commission. The Group is a principal when it controls the promised goods or services before their transfer to the customer. Indicators that the Group controls the goods or services before their transfer to the customer include, inter alia, as follows: the Group is the primary obligor for fulfilling the promises in the contract; the Group has inventory risk before the goods or services are transferred to the customer; and the Group has discretion in setting the prices of the goods or services. |
Financing income and expense | 3.15 Financing income and expense Finance income includes mainly accrued interest income using the effective interest method in respect of the sale of terminal equipment in installments, interest income from deposits and changes in the fair value of financial assets at fair value through profit or loss. Finance expenses include mainly interest and linkage expenses on borrowings received and debentures issued and financing expenses for provisions arising from legal claims. In the statements of cash flows, interest received, and dividends received are presented as part of cash flows from investing activities. The Group elected to present interest and linkage differences paid for loans and debentures under cash flows used for financing activities. |
Income tax expense | 3.16 Income tax expenses Income tax expense consists of current and deferred tax and is recognized in the statement of income, or in other comprehensive income to the extent it relates to items recognized in other comprehensive income. Current taxes Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date. Current taxes also include taxes in respect of prior years. Uncertain tax positions A provision for uncertain tax positions, including additional tax and interest expenses, is recognized when it is more likely than not that the Group will have to use its economic resources to pay the obligation. Deferred taxes Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The Group does not recognize deferred taxes for the following temporary differences: ● Initial recognition of goodwill. ● Differences arising from investment in subsidiaries and associates, if it is probable that they will not reverse in the foreseeable future and if the Group controls the date of reversal. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognized for carry-forward losses, tax benefits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. See Note 21. Offsetting deferred tax assets and liabilities The Group sets off deferred tax assets and liabilities if there is a legally enforceable right to offset the deferred tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, but they intend to settle the deferred tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. Presentation of tax expenses in the statement of cash flows Cash flows arising from taxes on income are classified in the statement of cash flows as cash flows from operating activities, unless they can be specifically identified with investing and financing activities. |
Earnings per share | 3.17 Earnings per share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise warrants and share options granted to employees. |
Dividend | 3.18 Dividend An obligation relating to a dividend proposed or declared after the reporting date is recognized only in the period in which the declaration was made (approved by the general shareholders' meeting). In the statement of cash flows, dividend paid is presented as part of cash flows used in financing activities. |
New standards and interpretations not yet adopted | 3.19 New standards and interpretations not yet adopted IFRIC 23, Uncertainty Over Income Tax Treatments IFRIC 23 clarifies application of recognition and measurement requirements in IAS 12 when there is uncertainty over income tax treatments. IFRIC 23 will be effective for annual periods beginning on January 1, 2019, with early application being permitted. The Group believes that application of IFRIC 23 will not have a material effect on the financial statements. |
Basis of Preparation (Tables)
Basis of Preparation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Statement Line Items [Line Items] | |
Schedule of effect on the consolidated statement of financial position, income and cash flows | Effect on the consolidated statement of financial position as at December 31, 2018 In accordance with the previous policy Change In accordance with IFRS 16 NIS NIS NIS Other receivables 321 (52 ) 269 Property, plant and equipment 6,315 (2 ) 6,313 Intangible assets 4,228 (1 ) 4,227 Right-of-use assets - 1,504 1,504 Trade and other payables 1,791 (89 ) 1,702 Current lease rights liabilities - 445 445 Non-current lease rights liabilities - 1,106 1,106 Equity attributable to shareholders 232 (4 ) 228 Non-controlling interests 545 (9 ) 536 Effect on the consolidated statement of income for 2018 In accordance with the previous policy Change In accordance with IFRS 16 NIS NIS NIS General and operating expenses 3,806 (412 ) 3,394 Depreciation and amortization 1,988 399 2,387 Impairment losses 2,291 3 2,294 Operating loss (1,394 ) 10 (1,384 ) Financing expenses net 505 26 531 Loss after financing expenses (1,899 ) (16 ) (1,915 ) Loss before income tax (1,902 ) (16 ) (1,918 ) Income tax expenses (56 ) (3 ) (59 ) Loss for the period (1,846 ) (13 ) (1,859 ) Loss attributable to shareholders of the company (1,025 ) (4 ) (1,029 ) Loss attribute to non-controlling interests (821 ) (9 ) (830 ) Effect on the consolidated statement of cash flows for 2018 In accordance with the previous policy Change In accordance with IFRS 16 NIS NIS NIS Net cash from operating activities 3,089 397 3,486 Net cash used in investing activities (2,643 ) 25 (2,618 ) Net cash used for financing activities (1,728 ) (422 ) (2,150 ) |
Initial application of IFRS 15, Revenue from Contracts with Customers [Member] | |
Statement Line Items [Line Items] | |
Schedule of effect on the consolidated statement of financial position, income and cash flows | Effect on the consolidated statement of financial position of the Group as at December 31, 2017: In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS Net subscriber acquisition asset (stated as deferred expenses and non-current investments) 4 111 115 Equity attributable to shareholders of the Company 1,224 22 1,246 Non-controlling interests 1,778 62 1,840 Total equity 3,002 84 3,086 Effect on the consolidated cash flows statement of the Group for 2017: Year ended December 31, 2017 In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS Net cash from operating activities 3,322 165 3,487 Net cash used in investing activities (963 ) (165 ) (1,128 ) Effect on the consolidated statement of income of the Group for 2017: Year ended December 31, 2017 In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS General and operating expenses 4,037 (131 ) 3,906 Salaries 2,041 (34 ) 2,007 Depreciation and amortization expenses 2,063 54 2,117 Operating profit 1,499 111 1,610 Profit after financing expenses 982 111 1,093 Profit before income tax 977 111 1,088 Income tax 320 27 347 Net profit for the period 657 84 741 Profit attributable to shareholders of the Company 56 22 78 Profit attributable to non-controlling interests 601 62 663 Earnings per share (Basic and Diluted) 1.88 0.74 2.62 |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Significant Accounting Policies [Abstract] | |
Schedule of estimated useful lives property, plant and equipment | Years Fixed line and international network equipment (switches, transmission, power) 4-12 Network 12-33 Subscriber equipment and installations 4-8 Equipment and infrastructure for multichannel television 3-15 Vehicles 6-7 Office and general equipment 5-10 Electronic equipment, computers and internal communication systems 3-7 Cellular network 4-10 Passive radio equipment at cellular network sites up to December 31, 2037 Buildings 25 Seabed cable 4-25 (mainly 25) |
Schedule of estimated useful lives for the current and comparative periods | Type of asset Amortization period Frequency usage rights Over the term of the license up to 2028 Computer programs and software licenses 3 - 10 years according to the term of the license or the estimated time of use of the software Customer relationships 5 - 7 years based on the estimated customer churn rate (using the accelerated depreciation method) Brand acquired in a business combination 12 |
Schedule of straight-line basis over the useful life or contractual lease period | Type of asset Weighted average of depreciation period as at January 1, 2018 (years) Cellular communications sites 6.5 Buildings 7 Vehicles 2 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of operating segments | Year ended December 31, 2016 Domestic fixed–line communications Cellular communications International communications and Internet services Multi-channel television Others Adjustments Consolidated NIS NIS NIS NIS NIS NIS NIS Revenue from external entities 4,063 2,587 1,478 1,745 198 - 10,071 Inter-segment revenues 320 43 70 - 20 (440 ) 13 Total revenue 4,383 2,630 1,548 1,745 218 (440 ) 10,084 Depreciation and amortization 717 380 137 296 16 615 2,161 Segment results - operating income 2,076 32 176 264 (34 ) (648 ) 1,866 Finance income 30 52 5 13 4 19 123 Finance expenses (475 ) (6 ) (15 ) (539 ) (2 ) (17 ) (1,054 ) Total financing income (expense), net (445 ) 46 (10 ) (526 ) 2 2 (931 ) Segment profit (loss) after finance expenses, net 1,631 78 166 (262 ) (32 ) (646 ) 935 Share in profit (loss) of equity-accounted investee - - 1 - (5 ) (1 ) (5 ) Segment profit (loss) before income tax 1,631 78 167 (262 ) (37 ) (647 ) 930 Income tax 399 17 42 (330 ) - 314 442 Segment results - net profit (loss) 1,232 61 125 68 (37 ) (961 ) 488 Additional information: Segment assets 7,111 3,294 1,177 2,026 193 3,260 17,061 Goodwill - - 6 - 10 3,050 3,066 Investment in equity-accounted investee - - 5 - 1 12 18 Segment liabilities 11,988 569 380 1,434 104 2,369 16,844 Investments in property, plant and equipment and intangible assets 828 277 126 227 13 - 1,471 Year ended December 31, 2017 Domestic fixed–line communications Cellular communications International communications and Internet services Multi-channel television Others Adjustments Consolidated NIS NIS NIS NIS NIS NIS NIS Revenue from external entities 3,953 2,500 1,466 1,650 220 - 9,789 Inter-segment revenues 291 46 71 - 17 (425 ) - Total revenue 4,244 2,546 1,537 1,650 237 (425 ) 9,789 Depreciation and amortization 728 383 135 285 20 566 2,117 Segment results - operating income 1,971 72 174 163 (20 ) (750 ) 1,610 Finance income 36 54 4 10 5 (40 ) 69 Finance expenses (439 ) (3 ) (12 ) (81 ) - (51 ) (586 ) Total financing income (expense), net (403 ) 51 (8 ) (71 ) 5 (91 ) (517 ) Segment profit (loss) after finance expenses, net 1,568 123 166 92 (15 ) (841 ) 1,093 Share in profit (loss) of equity-accounted investee - - - - (4 ) (1 ) (5 ) Segment profit (loss) before income tax 1,568 123 166 92 (19 ) (842 ) 1,088 Income tax 396 28 39 336 - (452 ) 347 Segment results - net profit (loss) 1,172 95 127 (244 ) (19 ) (390 ) 741 Additional information: Segment assets 9,086 3,271 1,199 1,502 174 2,460 17,692 Goodwill - - 6 - 10 2,921 2,937 Investment in equity-accounted investee - - 5 - (6 ) 11 10 Segment liabilities 13,901 536 410 1,154 64 1,488 17,553 Investments in property, plant and equipment and intangible assets 851 331 169 237 19 - 1,607 Year ended December 31, 2018 Domestic fixed–line communications Cellular communications International communications and Internet services Multi-channel television Others Adjustments* Consolidated NIS NIS NIS NIS NIS NIS NIS Revenue from external entities 3,883 2,401 1,338 1,473 226 - 9,321 Inter-segment revenues 313 42 53 - 15 (423 ) - Total revenue 4,196 2,443 1,391 1,473 241 (423 ) 9,321 Depreciation and amortization 850 655 194 323 21 345 2,388 Segment results - operating income 1,224 (2 ) 116 (56 ) (36 ) (2,630 ) (1,384 ) Finance income 32 56 1 27 - (27 ) 89 Finance expenses (502 ) (22 ) (16 ) (16 ) - (64 ) (620 ) Total financing income (expense), net (470 ) 34 (15 ) 11 - (91 ) (531 ) Segment profit (loss) after finance expenses, net 754 32 101 (45 ) (36 ) (2,721 ) (1,915 ) Share in profit (loss) of equity-accounted investee - - 1 - (4 ) - (3 ) Segment profit (loss) before income tax 754 32 102 (45 ) (40 ) (2,721 ) (1,918 ) Income tax 187 8 25 3 - (282 ) (59 ) Segment results - net profit (loss) 567 24 77 (48 ) (40 ) (2,439 ) (1,859 ) Additional information: Segment assets 8,896 4,124 1,332 1,606 157 971 17,086 Goodwill - - 6 - - 2,274 2,280 Investment in equity-accounted investee - - 6 - 3 - 9 Segment liabilities 14,284 1,425 567 687 84 1,564 18,611 Investments in property, plant and equipment and intangible assets 902 346 137 318 13 - 1,716 * The results of the multi-channel television segment, the cellular communications segment and the International communications and internet services segments are presented net of the impairment losses set out in Note 9. These impairment losses are presented as part of the adjustments. |
Schedule of adjustments for segment reporting of revenue, profit or loss, assets and liabilities | Year ended December 31, 2016 2017 2018 NIS NIS NIS Revenue Revenue from reporting segments 10,306 9,977 9,503 Revenue from other segments 218 237 241 Elimination of revenue from inter-segment sales except for revenue from sales to an associate reporting as a segment (440 ) (425 ) (423 ) Consolidated revenue 10,084 9,789 9,321 Year ended December 31, 2016 2017 2018 NIS NIS NIS Profit or loss Operating income for reporting segments 2,548 2,380 1,282 Financing expenses, net (931 ) (517 ) (531 ) Share in the losses (profit) of equity-accounted investees (5 ) (5 ) (3 ) Profit (loss) from operations classified in other categories (34 ) (20 ) (36 ) Depreciation and amortization of intangible assets resulting from the Bezeq PPA adjustments (635 ) (733 ) (975 ) Loss from impairment of assets (see Note 9) - - (1,638 ) Other adjustments (13 ) (17 ) (17 ) Consolidated profit (loss) before income tax 930 1,088 (1,918 ) December 31, 2017 2018 NIS NIS Assets Assets from reporting segments 15,069 15,970 Assets attributable to operations in other categories 178 159 Goodwill not attributable to segment assets 2,921 2,274 Loss from impairment of assets - (1,638 ) PPA not attributable to reporting segment 1,636 1,166 Assets resulting from the Bezeq PPA, net 1,678 1,477 Assets attributable to a non-reportable segment (843 ) (33 ) Consolidated assets 20,639 19,375 December 31, 2017 2018 NIS NIS Liabilities Liabilities from reporting segments 16,001 16,963 Liabilities attributable to operations in other categories 64 84 Inter-segment liabilities (1,360 ) (1,158 ) Liabilities resulting from the Bezeq PPA, net 386 247 Liabilities attributable to a non-reportable segment 2,462 2,475 Consolidated liabilities 17,553 18,611 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investments Including Derivatives [Abstract] | |
Schedule of investments | December 31, 2017 2018 NIS NIS Current investments Investments in marketable securities at fair value through profit and loss and others 321 396 Bank deposits 275 1,384 596 1,780 |
Trade and Other Receivables (Ta
Trade and Other Receivables (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Trade and other receivables [abstract] | |
Summary of composition of trade and other receivables | December 31, 2017 2018 NIS NIS Trade receivables, net* Outstanding debts 765 709 Credit cards and checks receivable 428 396 Unbilled receivables 235 237 Current maturities of long-term receivables 472 420 Related parties 15 11 Total trade receivables 1,915 1,773 Other receivables and current tax assets Prepaid expenses 66 34 Current tax assets 2 104 Other receivables (mainly from real estate sales) 202 131 Total other receivables 270 269 Long-term trade and other receivables Trade receivables- open debts* (1) 387 339 Long term receivables (from real estate sales) 106 131 493 470 2,678 2,512 * The amount of trade receivables is stated net of the provision for doubtful debts. (1) Discounted interest rates for long-term trade receivables are based the estimated credit risk of trade receivables. The discounted interest rates used by the Bezeq Group in 2018 are 3.4% - 4.6% (in 2017: 3.4% - 3.5%). |
Summary of excepted payment dates for long-term trade and other receivables | December 31, 2018 NIS 2020 329 2021 90 2022 and thereafter 51 470 |
Summary of change in provision for doubtful debts during the year | December 31, 2017 2018 NIS NIS Balance at January 1 111 92 Impaired loss recognized 20 23 Bad debts (39 ) (28 ) Balance at December 31 92 87 |
Summary of aging of trade receivables | December 31, 2017 December 31, 2018 Gross Impairment Gross Impairment NIS NIS NIS NIS Not past due 2,153 (6 ) 1,971 (5 ) Past due up to one year 165 (37 ) 151 (34 ) Past due one to two years 44 (27 ) 38 (16 ) Past due more than two years 32 (22 ) 39 (32 ) 2,394 (92 ) 2,199 (87 ) |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of detailed information about property, plant and equipment [abstract] | |
Schedule of property, plant and equipment | Switching Transmission, Multi- Office power, channel equipment, Cellular, equipment computers Land and And satellite Network and Subscriber and buildings equipment equipment infrastructure equipment vehicles Total NIS NIS NIS NIS NIS NIS NIS Cost Balance as at January 1, 2017 1,051 5,457 5,740 1,036 1,464 1,003 15,751 Additions 34 408 228 165 278 75 1,188 Disposals (81 ) - - (1 ) (4 ) (2 ) (88 ) Balance as at December 31, 2017 1,004 5,865 5,968 1,200 1,738 1,076 16,851 Balance as at January 1, 2018 1,004 5,865 5,968 1,200 1,738 1,076 16,851 Additions 22 396 213 247 311 86 1,275 Disposals (2 ) - - (1 ) (15 ) (9 ) (27 ) Transfer to Investment property (22 ) - - - - - (22 ) Balance as at December 31, 2018 1,002 6,261 6,181 1,446 2,034 1,153 18,077 Depreciation and impairment losses Balance as at January 1, 2017 402 3,472 2,736 369 953 747 8,679 Depreciation for the year 53 481 204 222 187 85 1,232 Balance as at December 31, 2017 455 3,953 2,940 591 1,140 832 9,911 Balance as at January 1, 2018 455 3,953 2,940 591 1,140 832 9,911 Depreciation for the year 73 481 210 214 215 84 1,277 Loss from impairment of assets 22 - - 526 - 28 576 Balance as at December 31, 2018 550 4,434 3,150 1,331 1,355 944 11,764 Carrying amounts As at January 1, 2017 649 1,985 3,004 667 511 256 7,072 As at December 31, 2017 549 1,912 3,028 609 598 244 6,940 As at December 31, 2018 452 1,827 3,031 115 679 209 6,313 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Intangible assets and goodwill [abstract] | |
Schedule of intangible assets and goodwill | Customer Computer Right of use relationships software in cellular and Goodwill and licenses frequencies brand names Others Total NIS NIS NIS NIS NIS NIS Cost Balance as at January 1, 2017 3,066 1,779 480 7,479 269 13,073 Acquisitions or additions from independent development - 227 - - - 227 Disposals - - - - (48 ) (48 ) Balance as at December 31, 2017 3,066 2,006 480 7,479 221 13,252 Balance as at January 1, 2018 3,066 2,006 480 7,479 221 13,252 Acquisitions or additions from independent development - 220 - - - 220 Disposals - (12 ) - - - (12 ) Balance as at December 31, 2018 3,066 2,214 480 7,479 221 13,460 Amortization and impairment losses Balance as at January 1, 2017 - 1,238 242 4,826 233 6,539 Amortization for the year - 218 29 530 9 786 Disposals - - - - (42 ) (42 ) Impairment losses 129 - - - - 129 Balance as at December 31, 2017 129 1,456 271 5,356 200 7,412 Balance as at January 1, 2018 129 1,456 271 5,356 200 7,412 Amortization for the year - 226 20 290 6 542 Impairment losses 659 104 - 505 11 1,279 Balance as at December 31, 2018 788 1,786 291 6,151 217 9,233 Carrying amounts As at January 1, 2017 3,066 541 238 2,653 36 6,534 As at December 31, 2017 2,937 550 209 2,123 21 5,840 As at December 31, 2018 2,278 428 189 1,328 4 4,227 |
Schedule of goodwill | December 31 2017 2018 NIS NIS Domestic fixed-line communications 1,548 1,548 Cellular communications 1,163 685 Multi-channel television 33 - International communications and internet services 181 40 Walla communications 7 - Others 5 5 Total 2,937 2,278 |
Schedule of attribution of impairment loss to group assets | NIS Broadcasting rights, net of rights exercised 403 Fixed assets 559 Intangible assets 106 Subscriber acquisition (assessed under IFRS 15) 29 Rights of use for leased assets 3 Total impairment recognized in the statements of DBS 1,100 Customer relations and branding 505 Goodwill 33 Total impairment loss of assets 1,638 Write-off of deferred tax attributed to customer relations and branding (114 ) Total impairment loss of multi-channel television cash-generating unit after tax 1,524 |
Deferred Expenses and Non-Cur_2
Deferred Expenses and Non-Current Investments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Deferred Expenses and Non-Current Investments [Abstract] | |
Schedule of deferred expenses and non-current investments | December 31 2017 2018 NIS NIS Deferred expenses (A) 314 270 Customer acquisition asset, net (D) 115 142 Deposit used as collateral against hedging transactions (B) 67 41 Bank deposit for loans to Company employees (C) 51 48 Investments in equity-accounted investee 11 8 558 509 A. For its operations, Bezeq International acquires indefeasible rights of use (“IRU”) from Mediterranean Nautilus (Israel) Ltd. for the acquisition of seabed cable capacities, which are accounted for as service transactions. Under the contract, Bezeq International has the right of use of the capacities until 2022 with an option for an extension until 2027. The amount of the prepaid expense is amortized on a straight line until 2027. The balance of the liability for the agreement with Mediterranean Nautilus is US$ 13.1. B. A deposit used as collateral for hedging transactions is payable in December 2020. C. A bank deposit for loans to Company employees without a repayment date. |
Schedule of subscriber acquisition assets | Subscriber acquisition assets NIS Cost Balance as at January 1, 2017 49 Additions 165 Disposals (18 ) Balance as at December 31, 2017 196 Additions 164 Disposals (27 ) Balance as at December 31, 2018 333 Amortization and impairment losses Balance as at January 1, 2017 42 Depreciation 57 Disposals (18 ) Balance as at December 31, 2017 81 Depreciation 108 Disposals (27 ) Impairment loss 29 Balance as at December 31, 2018 191 Carrying amount As at January 1, 2018 115 As at December 31, 2018 142 |
Broadcasting Rights, Net of R_2
Broadcasting Rights, Net of Rights Exercised (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Broadcast Rights, Net of Rights Exercised [Abstract] | |
Schedule of broadcasting rights net of rights exercised | December 31 2017 2018 NIS NIS Cost 797 1,010 Less rights exercised (343 ) (547 ) Impairment loss (see Note 9) - (403 ) Total 454 60 |
Investees (Tables)
Investees (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investees [Abstract] | |
Schedule of material subsidiaries held directly and indirectly by the Company | Principal location of the company’s Ownership activity interest B Communications (SP1) Ltd. and B Communications (SP2) Ltd. (1) Israel 100 % Bezeq - The Israel Telecommunication Corp. Limited Israel 26.34 % Subsidiaries of Bezeq - The Israel Telecommunication Corp. Limited Pelephone Communications Ltd. Israel 100 % Bezeq International Ltd. Israel 100 % DBS Israel 100 % Walla Communications Ltd. Israel 100 % (1) Held by B Communications (SP1) Ltd. |
Schedule of dividends cash declared and paid | 2016 2017 2018 NIS NIS NIS Distribution of a regular dividend NIS 0.25 per share - - 686 NIS 0.47 per share - 1,286 - NIS 0.52 per share 1,441 - - |
Schedule of information group's subsidiaries including fair value adjustments | December 31, Rate of ownership interests Carrying held by amount of non- Non- Non- non- controlling Current current Current current Total net controlling interests assets assets liabilities liabilities assets interests % NIS 2018 Bezeq Group 73.66 4,431 11,892 4,433 11,456 434 482 2017 Bezeq Group 73.66 4,823 12,026 3,857 10,848 2,144 1,840 2016 Bezeq Group 73.66 3,559 13,083 3,966 10,270 2,406 2,131 Year ended December 31, Cash flow Total from comprehensive financing Profit Income activities Total (loss) (loss) without Dividend increase attributable attributable Cash flow Cash flow dividend to paid to (decrease) Other Total to non- to non- from from non- non- in cash Profit comprehensive comprehensive controlling controlling operating investing controlling controlling and cash Revenues (loss) Income (loss) Income (loss) interests interests activities activities interests interests equivalents NIS 2018 Bezeq Group 9,321 (1,859 ) 42 (1,817 ) (830 ) (799 ) 3,486 (2,618 ) (1,645 ) (505 ) (1,282 ) 2017 Bezeq Group 9,789 858 (8 ) 850 663 657 3,525 (1,148 ) 104 (948 ) 1,533 2016 Bezeq Group 10,084 989 (15 ) 974 724 713 3,526 (1,567 ) (804 ) (1,062 ) 93 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Schedule of right of use asset | Communications sites Buildings Vehicles Total NIS NIS NIS NIS Cost Balance as at January 1, 2018 809 538 173 1,520 Additions for new agreements 159 15 146 320 Derecognition for terminated agreements (45 ) (9 ) (11 ) (65 ) Changes in agreements (mainly extension of the agreement periods) and revaluation 43 81 (22 ) 102 Balance as at December 31, 2018 966 625 286 1,877 Amortization and impairment losses Balance as at January 1, 2018 - - - - Amortization for the year 190 120 113 423 Derecognition for terminated agreements (18 ) (4 ) (9 ) (31 ) Changes in agreements and other (3 ) (1 ) (18 ) (22 ) Impairment loss - - 3 3 Balance as at December 31, 2018 169 115 89 373 Carrying amount Balance as at January 1, 2018 809 538 173 1,520 Balance as at December 31, 2018 797 510 197 1,504 |
Schedule of liability for a lease | Communications sites Buildings Vehicles Total NIS NIS NIS NIS Balance as at January 1, 2018 809 538 188 1,535 Additions for new agreements 156 14 146 316 Disposals (27 ) (5 ) (2 ) (34 ) Changes in agreements (mainly extension of the agreement periods) and revaluation 48 87 (5 ) 130 Financing expenses for employee benefits 14 9 3 26 Payments for a lease (190 ) (124 ) (108 ) (422 ) Balance as at December 31, 2018 810 519 222 1,551 Carrying amount Current maturities of a lease liability 203 124 118 445 Long-term liabilities for a lease 607 395 104 1,106 Total balance as at December 31, 2018 810 519 222 1,551 |
Schedule of analysis of repayment dates of liabilities for the Group's lease | Expected payment dates December 31, NIS Up to one year 446 1-5 years 852 More than five years 361 Total 1,659 |
Debentures, Bank Loans and Cr_2
Debentures, Bank Loans and Credit (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debentures, Bank Loans and Credit [Abstract] | |
Schedule of composition debentures, bank loans and credit | December 31 2017 2018 NIS NIS Current liabilities Current maturities of debentures 1,166 3,376 Current maturities of bank loans 692 621 1,858 3,997 Non-current liabilities Debentures 8,036 5,537 Bank loans 4,401 4,100 12,437 9,637 14,295 13,634 |
Schedule of terms and debt repayment | December 31, 2017 December 31, 2018 Nominal Carrying Carrying interest Par value amount Par value amount Currency rate NIS NIS NIS NIS % Loans from banks and others: Unlinked - Variable interest 675 675 500 500 NIS P-0.33 to P+0.2 Unlinked - Fixed interest 4,398 4,418 4,208 4,221 NIS 2.40 to 6.85 5,073 5,093 4,708 4,721 Debentures: Linked to the Israeli CPI - fixed interest 3,897 4, 091 3,290 3,464 NIS 2.20 to 8.40 Unlinked - variable interest 734 732 587 586 NIS Makam for one year + 1.4 Unlinked - fixed interest 4,347 4,379 4,811 4,863 NIS 3.60 to 6.65 8,978 9,202 8,688 8,913 Total interest-bearing liabilities 14,051 14,295 13,396 13,634 |
Schedule of movement in liabilities arising from financing activities | Debentures (including accrued interest) Loans (including accrued interest) Total NIS NIS NIS Balance as at January 1, 2017 9,637 3,944 13,581 Changes due to cash flows from financing activities Consideration from the issue of debentures and receipt of loans, less transaction costs 635 2,000 2,635 Repayment of debentures and loans (978 ) (835 ) (1,813 ) Interest paid (379 ) (158 ) (537 ) Net cash generated from (used in) finance activities (722 ) 1,007 285 Financing expenses recognized in the statement of income 320 163 483 Balance as at December 31, 2017 9,235 5,114 14,349 Balance as at January 1, 2018 9,235 5,114 14,349 Changes due to cash flows from financing activities Consideration from the issue of debentures and receipt of loans, less transaction costs 819 320 1,139 Repayment of debentures and loans (1,107 ) (686 ) (1,793 ) Interest paid (325 ) (198 ) (523 ) Net cash generated from (used in) finance activities (613 ) (564 ) (1,177 ) Financing expenses recognized in the statement of income 320 188 508 Balance as at December 31, 2018 8,942 4,738 13,680 |
Trade and Other Payables (Table
Trade and Other Payables (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Trade and other current payables [abstract] | |
Schedule of trade and other payables | December 31, 2017 2018 NIS NIS Open accounts* 1,041 862 Checks payable 21 21 Trade payables 1,062 883 Other payables including derivatives: Liabilities to employees and other liabilities for salaries 355 352 Advance payment for Sakia property (see Note 13) - 155 Institutions 87 82 Accrued interest 53 47 Deferred income 90 103 Derivatives 54 43 Other payables 18 37 Total other payables including derivatives 657 819 Total Trade and Other Payables 1,719 1,702 * Of which, the carrying amount of trade payables that are related parties as at December 31, 2018 amounts to NIS 2 (as at December 31, 2017 – NIS 31). |
Provisions (Tables)
Provisions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Provisions [abstract] | |
Schedule of provisions | Dismantling and clearing of cellular Customer Additional and other claims legal claims sites Total NIS NIS NIS NIS Balance as at January 1, 2018 59 28 47 134 Provisions created 84 15 1 100 Provisions used (6 ) - (2 ) (8 ) Provisions cancelled (3 ) (8 ) (2 ) (13 ) Balance as at December 31, 2018 134 35 44 213 Current 134 35 6 175 Non-current - - 38 38 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of detailed information about financial instruments [abstract] | |
Schedule of contractual repayment dates of financial liabilities | The Company: December 31, 2018 Carrying Contractual 2024 amount cash flow 2019 2020 2021-2023 and later NIS NIS NIS NIS NIS NIS Non-derivative financial liabilities Trade and other payables 12 12 12 - - - Debentures* 2,455 3,021 319 277 781 1,644 Total 2,467 3,033 331 277 781 1,644 Consolidated: December 31, 2018 Carrying Contractual 2024 amount cash flow 2019 2020 2021-2023 and later NIS NIS NIS NIS NIS NIS Non-derivative financial liabilities Trade and other payables 1,558 1,558 1,558 - - - Bank loans 4,721 5,360 771 835 2,221 1,533 Debentures* 8,913 10,165 1,392 1,327 3,895 3,551 Total 15,192 17,083 3,721 2,162 6,116 5,084 Financial liabilities for derivative instruments Forward contracts on the Israeli CPI 138 138 43 47 48 - * The Company's contractual repayments in the tables above reflects the original schedule of the Company's debentures. The Company's debentures including accrued interest in the amount of NIS 2,467 were classified as current maturities on the statements of financial position as of December 31, 2018, please refer to Note 33D. |
Schedule of linkage and foreign currency risk | December 31, 2017 Foreign Israeli currency linked Unlinked CPI-linked (mainly US$) NIS NIS NIS Current assets Cash and cash equivalents 2,322 - 64 Trade receivables 1,862 36 17 Other receivables 44 154 - Related party 43 - - Investments including derivatives 445 32 119 Total current assets 4,716 222 200 Non-current assets Trade and other receivables 372 121 - Investments including derivatives 51 - 67 Total non-current assets 423 121 67 Total assets 5,139 343 267 Current liabilities Debentures, loans and borrowings 1,213 645 - Trade and other payables 1,344 56 237 Total current liabilities 2,557 701 237 Non-current liabilities Debentures and bank loans 9,104 3,333 - Other liabilities including derivatives - 159 10 Total non-current liabilities 9,104 3,492 10 Total liabilities 11,661 4,193 247 Total exposure in the statement of financial position (6,522 ) (3,850 ) 20 Forward transactions (2,308 ) 1,994 314 December 31, 2018 Foreign Israeli currency linked Unlinked CPI-linked (mainly US$) NIS NIS NIS Current assets Cash and cash equivalents 1,058 - 46 Trade receivables 1,732 22 19 Other receivables 92 136 - Investments including derivatives 1,613 56 110 Total current assets 4,495 214 175 Non-current assets Trade and other receivables 365 105 - Investments including derivatives 49 - 41 Total non-current assets 414 105 41 Total assets 4,909 319 216 Current liabilities Debentures, loans and borrowings 3,365 632 - Trade and other payables 1,382 53 166 Total current liabilities 4,747 685 166 Non-current liabilities Debentures and bank loans 6,879 2,758 - Other liabilities including derivatives - 95 5 Total non-current liabilities 6,879 2,853 5 Total liabilities 11,626 3,538 171 Total exposure in the statement of financial position (6,717 ) (3,219 ) 45 Forward transactions (1,520 ) 1,350 170 |
Schedule of information regarding the israeli CPI and significant exchange rates | Year ended December 31 December 31 2016 2017 2018 2016 2017 2018 Rate of change Reporting date spot rate % % % NIS NIS NIS 1 US dollar (1.5 ) (9.8 ) 8.1 3.845 3.467 3.748 1 euro (4.8 ) 2.7 3.32 4.044 4.153 4.291 Israeli CPI in Points (0.3 ) 0.4 0.9 139.59 140.00 141.26 |
Schedule of interest bearing financial instruments | December 31 2017 2018 NIS NIS Fixed rate instruments Financial assets 1,986 2,739 Financial liabilities (12,888 ) (12,547 ) (10,902 ) (9,808 ) Variable rate instruments Financial assets 30 59 Financial liabilities (1,407 ) (1,086 ) (1,377 ) (1,027 ) |
Schedule of fair value of forward contracts on available market information (tier 2) in fair value hierarchy | Number of Nominal Capital Hedge item Repayment date Transactions Value Fair value reserve NIS NIS NIS December 31, 2017: Debentures (Series 6) December 2018 - December 2022 9 1,994 (200 ) 48 1,994 (200 ) 48 December 31, 2018: Debentures (Series 6) December 2019 - December 2022 6 1,350 (138 ) 12 1,350 (138 ) 12 |
Schedule of financial instruments measured at fair value for disclosure | December 31, 2017 December 31, 2018 Fair value weighted average Carrying Fair Carrying Fair discount amount value amount value rate NIS NIS NIS NIS % Secured loans from banks and others Unlinked 4,436 4,693 4,235 4,324 3.09 Debentures Issued to the public (CPI linked) 4,088 4,338 3,464 3,602 0.88 Issued to the public (Unlinked) 4,097 4,322 4,681 4,405 2.86 Issued to institutional investors (CPI linked) 15 17 8 8 0.55 Issued to institutional investors (unlinked) 302 326 202 211 3.11 12,938 13,696 12,590 12,550 |
Schedule of financial instruments measured at fair value | December 31, 2017 Level 1 Level 2 Level 3 Total NIS NIS NIS NIS Financial assets held for trading Monetary funds and ETFs 14 - - 14 Marketable securities 375 - - 375 Forward contracts - (212 ) - (212 ) Contingent consideration for a business combination - - (14 ) (14 ) 389 (212 ) (14 ) 163 December 31, 2018 Level 1 Level 2 Level 3 Total NIS NIS NIS NIS Financial assets held for trading Monetary funds and ETFs 18 - - 18 Marketable securities 376 - - 376 Forward contracts - (135 ) - (135 ) 394 (135 ) - 259 |
Schedule of carrying amount of balances as stated in statement of financial position | December 31, 2017 2018 NIS NIS Trade and other receivables, gross 115 94 Offset amounts (99 ) (83 ) Trade and other receivables presented in the statement of financial position 16 11 Trade payables, gross 143 121 Offset amounts (99 ) (83 ) Trade and other payables presented in the statement of financial position 44 38 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Employee Benefits [Abstract] | |
Summary of liabilities for employee benefits | December 31, 2017 2018 NIS NIS Current liabilities for: Holiday 115 112 Sick leave 142 133 Early retirement 16 329 Current maturities of pensioner benefits 7 7 Total current liability for employee benefits 280 581 Non-current liabilities for: Voluntary redundancy for employees transferred from civil service - 241 Liability for pensioner benefits 120 115 Severance compensation (net) (see composition below) 57 54 Early notice 23 23 Pension 72 12 Total non-current liabilities for employee Benefits 272 445 Total liabilities for employee benefits 552 1,026 Composition of liabilities for severance pay: Liabilities for severance pay 224 218 Fair value of plan assets (167 ) (164 ) 57 54 |
Summary of employee benefits for defined contribution plan | Year ended December 31, 2016 2017 2018 NIS NIS NIS Amount recognized as an expense for a defined contribution plan 209 228 232 |
Summary of actuarial assumptions | December 31, 2017 December 31, 2018 Average capitalization rate Average capitalization rate % % Severance compensation 3.3 3.73 Retirement benefits 3.6 4.1 |
Summary of assumptions regarding salary increases of the main employee groups | Salary increase assumptions Bezeq permanent employees Regarding an expected wage increase for 2019-2026, an average update of 7% for young employees, and decreasing gradually to 2.7% at the age of 66. New Bezeq permanent employees Average update of 3.2% for young employees, decreasing gradually to 1.4% at the age of 66. Bezeq non-permanent employees 6.4% for young employees decreasing gradually to 0.1%, 2% ( in real terms ) for senior employees. 2% (in real term) for senior employees Pelephone employees An increase of 3% in 2018 (2017- 3.1%), as set out in the collective agreement at Pelephone Bezeq International employees An increase of 3%, as set out in the collective agreement at Bezeq International DBS employees Rate of increase of 3.5% |
Summary of principal actuarial assumptions | Year ended December 31, 2017 2018 Years Years Discount rate - addition of 0.5% (29 ) (37 ) Rate of future salary increases - addition of 0.5% 40 27 Rate of employees leaving - addition of 5.0% (17 ) (12 ) |
Summary of average weighted useful life of liabilities | Year ended December 31, 2017 2018 Years Years Severance compensation 10.4 9.9 Retirement benefits 14.7 13.6 |
Income Tax (Tables)
Income Tax (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax [Abstract] | |
Schedule of composition of income tax expenses | Year ended December 31, 2016 2017 2018 NIS NIS NIS Current tax expenses Expenses for the current year 437 438 311 Adjustments for prior years (28 ) 54 (24 ) Total current tax expenses 409 492 287 Deferred tax expenses (income) Adjustments for prior years according to an assessment agreement - (54 ) - Reversal of temporary differences according to an assessment agreement - 21 - Write-off of a provision for tax due to impairment, see Note 9 - - (114 ) Creation and reversal of temporary differences (33 ) (112 ) (232 ) Total deferred tax expenses (33 ) (145 ) (346 ) Income tax expenses (benefit) 442 347 (59 ) |
Schedule of reconciliation between the theoretical tax on the pre-tax income and the tax expense | Year ended December 31, 2016 2017 2018 NIS NIS NIS Income (loss) before income tax 930 1,088 (1,918 ) Statutory tax rate 25 % 24 % 23 % Income tax at the statutory tax rate 232 260 (441 ) Effect of changes in tax rate on deferred taxes 67 - - Expenses not recognized for tax purposes 47 48 54 Current year tax losses and benefits for which deferred taxes were not created 124 39 168 Temporary differences for impairment of assets for which no deferred tax assets were created (Note 9) - - 160 Taxes in respect of previous years (28 ) - - Income tax expenses (benefit) 442 347 (59 ) |
Schedule of recognized deferred tax assets and liabilities | Property, plant equipment, Carry- Brand and Employee forward Names and intangible benefits losses for Customers assets plan DBS relationship Others Total NIS NIS NIS NIS NIS NIS Balance of deferred tax asset (liability) as at December 31, 2016 (348 ) 178 1,188 (615 ) 11 414 Recognized in profit or loss 25 (13 ) (22 ) 127 28 145 Recognized in equity - - - - 1 1 Balance of deferred tax assets (liability)as at December 31, 2017 (323 ) 165 1,166 (488 ) 40 560 Balance of deferred tax asset (liability) as at December 31, 2017 (323 ) 165 1,166 (488 ) 40 560 Recognized in profit or loss (14 ) 101 - 71 (18 ) 140 Write-off of deferred tax (See Note9) - - - 207 - 207 Recognized in equity - 2 - - (6 ) (4 ) Balance of deferred tax assets (liability)as at December 31, 2018 (337 ) 268 1,166 (210 ) 16 903 |
Contingent Liabilities (Tables)
Contingent Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of contingent liabilities [abstract] | |
Schedule of detailed description of the Bezeq Group's contingent liabilities | Balance of provisions Amount of additional exposure Amount of exposure for claims for which the amount of exposure cannot be assessed Claims group Nature of the claims NIS NIS NIS Customer claims Mainly motions for certification of class actions concerning contentions of unlawful collection of payment and deterioration in service provided by the Group companies. 134 4,954 *730 Claims by enterprises and companies Claims alleging liability of the Group companies in respect of their activities and/or the investments made in various projects. 4 **13 **,***3,822 Claims of employees and former employees of Group companies Mainly individual lawsuits filed by employees and former employees of the Group, regarding various payments. - 3 - Claims by the State and authorities Various claims by the State of Israel, government institutions and authorities (“the Authorities”). These are mainly procedures related to regulations relevant to the Group companies and financial disputes concerning monies paid by the Group companies to the Authorities (including property taxes). 31 21 - Supplier and communication provider claims Legal claims for compensation for alleged damage as a result of the supply of the service and/or the product. - 65 9 Claims for punitive damages, real estate and infrastructure Claims for alleged physical damage or damage to property caused by Group companies and in relation to real estate and infrastructure. The additional amount of exposure for punitive damages does not include claims for which the insurance coverage is not disputed. - 71 - Total legal claims against the Bezeq Group companies 169 5,127 4,561 * Including exposure in the amount of NIS 300 against a subsidiary and against four additional defendants. ** Including exposure of NIS 2 billion for a motion for certification as a class action filed by a shareholder against Bezeq and officers in Bezeq, referring to alleged reporting omissions by Bezeq regarding the wholesale market and the reduction of interconnect fees, which the plaintiff estimates at NIS 1.1 billion or NIS 2 billion (depending on the method used to calculate the damage). On August 27, 2018, the court certified the claim as a class action. On October 28, 2018, Bezeq filed a motion for a rehearing of the certification ruling. Subsequently, the court decided to stay the proceedings until a ruling is made on the motion for a rehearing. *** Two motions for certification of a class action seeking a total of NIS 1.8 billion, filed in June 2017 against Bezeq, officers in the Bezeq Group, B Communications and companies in the group of our controlling shareholders regarding the transaction relating to Bezeq’s acquisition of DBS shares from Eurocom DBS Ltd. In accordance with the court’s decision, a joint motion is expected to be filed instead of these two motions. The proceeding was stayed due to the investigation. The court approved the request of the Attorney General to inform the court by October 31, 2019, of the continued conduct of the proceedings in view of the ongoing investigation. |
Agreements (Tables)
Agreements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Agreements [Abstract] | |
Schedule of minimum future contractual rental payments during the next five years | Space segments Content and copyright Total Year ended December 31 NIS NIS NIS 2019 85 495 580 2020 85 354 439 2021 85 260 345 2022 82 225 307 2023 onwards 485 64 549 822 1,398 2,220 |
Capital and Capital Reserves (T
Capital and Capital Reserves (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Capital and Capital Reserves [Abstract] | |
Schedule of equity | Authorized Registered and paid up December 31 December 31 2017 and 2018 2017 and 2018 Number of shares Ordinary shares of NIS 0.1 par value each 50,000,000 29,889,045 |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenues [Abstract] | |
Schedule of revenues | Year ended December 31, 2016 2017 2018 NIS NIS NIS Domestic fixed line communications – Bezeq fixed-line Fixed line telephony 1,352 1,255 1,130 Internet - infrastructure 1,461 1,488 1,525 Transmission and data communication 835 775 769 Cloud and digital services 203 230 260 Other services 213 205 199 4,064 3,953 3,883 Cellular communications - Pelephone Cellular services and terminal equipment 1,777 1,743 1,713 Sale of terminal equipment 811 757 688 2,588 2,500 2,401 International communications, internet services and NEP – Bezeq international 1,480 1,467 1,338 Multi-channel television - DBS 1,745 1,650 1,473 Others 207 219 226 10,084 9,789 9,321 |
Salaries (Tables)
Salaries (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Salaries [Abstract] | |
Schedule of salaries | Year ended December 31, 2016 2017 2018 NIS NIS NIS Total salaries and incidentals 2,544 2,578 2,574 Less - salaries recognized in investments in property, plant and equipment and in intangible assets 529 571 579 2,015 2,007 1,995 |
General and Operating Expenses
General and Operating Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
General and Operating Expenses [Abstract] | |
Schedule of general and operating expenses | Year ended December 31, 2016 2017 2018 NIS NIS NIS Terminal equipment and materials 831 855 737 Interconnectivity and payments to domestic and international operators 825 805 789 Maintenance of buildings and sites* 605 584 286 Marketing and general expenses 706 610 570 Services and maintenance by sub-contractors 261 260 277 Vehicle maintenance expenses* 164 156 82 Content services expenses 629 636 653 4,021 3,906 3,394 * See Note 2.I.1 for information about early adoption of IFRS 16, Leases. |
Other Operating Expenses, Net (
Other Operating Expenses, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Operating Expenses (Income), Net [Abstract] | |
Schedule of other operating expenses, net | Year ended December 31, 2016 2017 2018 NIS NIS NIS Provision for severance pay in early retirement See note 20E 96 23 559 Provision for claims (4 ) 19 91 Capital gain from sale of property plant and equipment (86 ) (27 ) 1 Profit from sale of an associate - - (15 ) Others 15 5 (1 ) 21 20 635 |
Financing Expenses, Net (Tables
Financing Expenses, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Financing Expenses (Income) [Abstract] | |
Schedule of Financing Expenses, Net | Year ended December 31 2016 2017 2018 NIS NIS NIS Income on bank deposits, investments and others (13 ) (2 ) (1 ) Change in fair value of financial assets measured at fair value through profit or loss (29 ) (7 ) (27 ) Income in respect of credit in sales, net of discount (42 ) (35 ) (30 ) Linkage and exchange rate differences, net (16 ) - - Other finance income (23 ) (25 ) (31 ) Total financing income (123 ) (69 ) (89 ) Interest expenses on financial liabilities 871 445 472 Linkage and exchange rate differences, net 38 48 64 Change in contingent consideration in a business combination 55 (14 ) 43 Change in fair value of financial assets measured at fair value through profit or loss 23 39 - Financing expenses for employee benefits, net 15 35 9 Financing expenses for lease commitments - - 26 Other financing expenses 52 33 6 Total financing expenses 1,054 586 620 Financing expense, net 931 517 531 |
Earnings (Loss) per Share (Tabl
Earnings (Loss) per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings (Loss) per Share [Abstract] | |
Schedule of basic and diluted earnings per share was based on income (loss) attributable to ordinary shareholders | Year ended December 31 2016 2017 2018 NIS NIS NIS Earnings (loss) attributable to ordinary Shareholders Basic earnings (loss) for the year (236 ) 78 (1,029 ) Effect of diluted per share loss in a subsidiary - - - Diluted earnings (loss) for the year (236 ) 78 (1,029 ) |
Schedule of weighted average number of ordinary shares (basic and diluted) | Year ended December 31 2016 2017 2018 Thousands of Thousands of Thousands of shares of NIS 0.1 shares of NIS 0.1 Shares of NIS 0.1 par value par value par value Weighted average number of ordinary shares (basic and diluted) 29,889 29,889 29,889 |
Transactions with Related Par_2
Transactions with Related Parties (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Transactions with Related Parties [Abstract] | |
Schedule of balances with related parties | December 31, 2017 2018 NIS NIS Receivables - associates 8 7 Liabilities to related parties, net (23 ) 6 Advanced payment to Eurocom DBS (not including interest) for contingent consideration 99 99 |
Schedule of transactions with related parties | Year ended December 31, 2016 2017 2018 NIS NIS NIS Revenues From associates 7 8 6 From related parties 13 23 31 Expenses To related parties 110 122 *54 To associates 2 5 5 Investments Related parties 59 28 1 Acquisition of DBS 55 **(70 ) - Revised fair value of the excess advance payments for acquisition of DBS - **56 **43 * Related-party expenses include amounts paid by DBS to Space Communications Ltd. (“Spacecom”) up to May 3, 2018. It should be noted subsequent to this date, the Company believes, based on information it received, that Spacecom ceased to be a related party. In 2018, DBS paid a total of NIS 74 to Spacecom. ** Adjustment of the liability for contingent consideration for a business combination with DBS and adjustment of the fair value estimate of the amount expected to be returned to the Company from the excess of the advance payments that it paid, recognized as financing income, net. |
Schedule of transactions listed in section 270(4) of the Companies Law | Approval date of the general meeting (after approval of Bezeq's audit committee and Board of Directors) Nature of the transaction Amount of the transaction December 8, 2015 – see (1) below Amendment to the framework agreement between Pelephone and Eurocom Cellular Communications Ltd, so that it will be extended to other products and brands, including related services for all products and its extension until December 31, 2018 (or three years after the acquisition date of any additional products or brands, whichever is earlier). Annual scope of up to NIS 50 (for all the products). June 30, 2016 – see (2) below Extension of the amended agreement of Bezeq with Eurocom Communications Ltd. ("Eurocom Communications") for ongoing management and consultation services for the Company for a period of three years. The management agreement was terminated on April 25, 2018. For the period between January 1, 2018 and April 25, 2018, an amount of NIS 800,000 was not paid and was offset against a debt. April 3, 2017 – see (3) below Approval of Bezeq vote at the general meeting of DBS in favor of the agreement between DBS and Space Communications Ltd. ("Spacecom" and "the Parties" respectively) with an amendment/addendum to the existing agreement between the parties dated November 4, 2013, for the lease of satellite segments in Spacecom's satellites ("the Agreement"), including in favor of implementation of the Agreement. The validity of the Agreement remains the same as the original agreement, namely, until the end of 2028. A total nominal cost of up to USD 263 for the entire term of the Agreement (until December 31, 2028), reflecting an average annual cost of USD 21.9. It should be noted that the overall cost of the Agreement may be lower if surplus revenue sharing mechanisms are applied and/or the assumptions set out in the amendment to the Agreement. For further information, see Note 23) (1) Bezeq has a personal interest in the transaction, since Eurocom Cellular Communications Ltd. (a party to the transaction), is controlled by Eurocom Communications, which is the ultimate controlling shareholder of Bezeq. (2) The management agreement stipulated that Eurocom Communications will provide the services of Shaul Elovitch, who will serve as executive chairman of the Board of Directors of the Company and its subsidiaries, with a position of 70%. In addition, it was determined that Eurocom Communications will provide directors on its behalf, to serve on the boards of directors of the Company and the subsidiary companies. Eurocom will also provide ongoing consulting services as follows: (A) directors' compensation, consisting of annual participation compensation and actual participation compensation based on a maximum amount for one meeting (as this term is defined in the Companies Regulations (Rules for Compensation and Expenses of an External Director), 2000), based on the relevant rating of the Company of the subsidiary/sub-subsidiary (as the case may be) at that date, for the participation of the directors serving on behalf of the Company's controlling shareholders, as part of their membership and their position as directors in the Company and/or its subsidiaries and the various committees, subject to adjustments in accordance with their number and presence at meetings; (B) NIS 3.5 per year for the service and activities of Shaul Elovitch as active chairman of the Board of Directors of the Company and its subsidiaries; and (C) NIS 432 thousand per year for ongoing consultation services. On July 26, 2018, Bezeq Board of Directors resolved that the provision of all components of the services under the Management Agreement was de facto discontinued on April 25, 2018, and determined the amount of NIS 800,000 due to Eurocom Communications from the Bezeq, for the period between January 1, 2018 and April 25, 2018 should not be paid, due to the restrictions imposed on the activities of Shaul Elovitch and other directors who serve or who served on the Board of Directors of Bezeq and its subsidiaries on behalf of Eurocom Communications in the reporting year, in connection with the investigation conducted by the ISA and the Israel Police. The amount was not paid to Eurocom Communications in practice but was deferred and offset against the debt of Eurocom Communications to Bezeq. (3) Bezeq had a personal interest in the transaction as at the date of its approval, since, as at the date of the transaction, Spacecom was controlled by Eurocom Communications, the ultimate controlling shareholder of Bezeq. To the best of the Company's knowledge and in accordance with information provided to the Company by Eurocom Communications, the link between Eurocom Communications and Spacecom has been severed, since the court appointed a receiver for the shares of Spacecom held by Eurocom Communications ("the Spacecom Shares under Receivership"), which holds the full voting rights, and in view of the fact that as Bezeq was informed, the value of the collateral held by the receiver, including the value of the Spacecom Shares under Receivership, does not exceed the amount of the debt underlying the appointment of the receiver. |
Schedule of financial value of the transactions | Amounts included in the consolidated financial statements NIS Expenses 28 |
Schedule of key management personnel compensation | Year ended December 31 2016 2017 2018 NIS NIS NIS Employee benefits 2 2 2 |
General (Details)
General (Details) - ILS (₪) ₪ / shares in Units, ₪ in Millions | Nov. 06, 2017 | Feb. 01, 2016 | Apr. 14, 2010 |
General (Textual) | |||
Description of controlling shareholder | In accordance with the notice, the ISA concluded that there is prima facie evidence establishing the involvement of the main suspects in the case, in offenses of: (1) fraudulently receiving funds in connection with the entitlement of Bezeq's former controlling shareholder to receive contingent consideration of NIS 170 as part of the transaction for Bezeq's purchase of DBS shares from such shareholder, which consideration was based on certain targets to be met by DBS; (2) leaking the material of the independent committee of Bezeq's Board of Directors that examined interested party transactions (the transaction for the acquisition of DBS shares by Bezeq and the transaction between DBS and Space Communications Ltd. for the purchase by DBS of satellite segments from Space Communications Ltd.) to Bezeq's former controlling shareholder and associates; and (3) promoting Bezeq's interests in the Ministry of Communications in violation of the Penal Law and the Israel Securities Law. | ||
Bezeq [Member] | |||
General (Textual) | |||
Business acquisition of shares | 115,500,000 | ||
Percentage of outstanding shares | 4.18% | ||
Share price | ₪ 8.5 | ||
Transaction cost | ₪ 978 | ||
Percentage of ownership interest | 26.34% | ||
Equity interest percentage | 30.44% |
Basis of Preparation (Details)
Basis of Preparation (Details) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement Line Items [Line Items] | ||||
Other receivables | ₪ 269 | [1] | ₪ 270 | |
Property, plant and equipment | 6,313 | [1] | 6,940 | ₪ 7,072 |
Intangible assets | 4,227 | [1] | 5,840 | ₪ 13,073 |
Right-of-use assets | 1,504 | [1] | ||
Trade and other payables | 1,702 | [1] | 1,719 | |
Current lease rights liabilities | 445 | [1] | ||
Non-current lease rights liabilities | 1,106 | [1] | ||
Equity attributable to shareholders | 228 | [1] | 1,246 | |
Non-controlling interests | 536 | [1] | ₪ 1,840 | |
In accordance with the previous policy [Member] | ||||
Statement Line Items [Line Items] | ||||
Other receivables | 321 | |||
Property, plant and equipment | 6,315 | |||
Intangible assets | 4,228 | |||
Right-of-use assets | ||||
Trade and other payables | 1,791 | |||
Current lease rights liabilities | ||||
Non-current lease rights liabilities | ||||
Equity attributable to shareholders | 232 | |||
Non-controlling interests | 545 | |||
Change [Member] | ||||
Statement Line Items [Line Items] | ||||
Other receivables | (52) | |||
Property, plant and equipment | (2) | |||
Intangible assets | (1) | |||
Right-of-use assets | 1,504 | |||
Trade and other payables | (89) | |||
Current lease rights liabilities | 445 | |||
Non-current lease rights liabilities | 1,106 | |||
Equity attributable to shareholders | (4) | |||
Non-controlling interests | ₪ (9) | |||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Basis of Preparation (Details 1
Basis of Preparation (Details 1) - ILS (₪) ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Statement Line Items [Line Items] | ||||
General and operating expenses | ₪ 3,394 | [1] | ₪ 3,906 | ₪ 4,021 |
Depreciation and amortization | 2,387 | [1] | 2,117 | 2,161 |
Impairment losses | 2,294 | [1] | 129 | |
Operating loss | (1,384) | [1] | 1,610 | 1,866 |
Financing expenses net | 531 | [1] | 517 | 931 |
Loss after financing expenses | (1,915) | [1] | 1,093 | 935 |
Profit (loss) before income tax | (1,918) | [1] | 1,088 | 930 |
Income tax expenses | (59) | [1] | 347 | 442 |
Loss for the period | (1,859) | [1] | 741 | 488 |
Loss attributable to shareholders of the company | (1,029) | [1] | 78 | (236) |
Profit (loss) attributable to non-controlling interests | (830) | [1] | ₪ 663 | ₪ 724 |
In accordance with the previous policy [Member] | ||||
Statement Line Items [Line Items] | ||||
General and operating expenses | 3,806 | |||
Depreciation and amortization | 1,988 | |||
Impairment losses | 2,291 | |||
Operating loss | (1,394) | |||
Financing expenses net | 505 | |||
Loss after financing expenses | (1,899) | |||
Profit (loss) before income tax | (1,902) | |||
Income tax expenses | (56) | |||
Loss for the period | (1,846) | |||
Loss attributable to shareholders of the company | (1,025) | |||
Profit (loss) attributable to non-controlling interests | (821) | |||
Change [Member] | ||||
Statement Line Items [Line Items] | ||||
General and operating expenses | (412) | |||
Depreciation and amortization | 399 | |||
Impairment losses | 3 | |||
Operating loss | 10 | |||
Financing expenses net | 26 | |||
Loss after financing expenses | (16) | |||
Profit (loss) before income tax | (16) | |||
Income tax expenses | (3) | |||
Loss for the period | (13) | |||
Loss attributable to shareholders of the company | (4) | |||
Profit (loss) attributable to non-controlling interests | ₪ (9) | |||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Basis of Preparation (Details 2
Basis of Preparation (Details 2) - ILS (₪) ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Statement Line Items [Line Items] | ||||
Net cash from operating activities | ₪ 3,486 | [1] | ₪ 3,487 | ₪ 3,462 |
Net cash used in investing activities | (2,618) | [1] | (1,128) | (948) |
Net cash used for financing activities | (2,150) | [1] | ₪ (735) | ₪ (2,333) |
In accordance with the previous policy [Member] | ||||
Statement Line Items [Line Items] | ||||
Net cash from operating activities | 3,089 | |||
Net cash used in investing activities | (2,643) | |||
Net cash used for financing activities | (1,728) | |||
Change [Member] | ||||
Statement Line Items [Line Items] | ||||
Net cash from operating activities | 397 | |||
Net cash used in investing activities | 25 | |||
Net cash used for financing activities | ₪ (422) | |||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Basis of Preparation (Details 3
Basis of Preparation (Details 3) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | [1] | Dec. 31, 2017 |
Statement Line Items [Line Items] | |||
Net subscriber acquisition asset (stated as deferred expenses and non-current investments) | ₪ 509 | ₪ 558 | |
Equity attributable to shareholders | 228 | 1,246 | |
Non-controlling interests | 536 | 1,840 | |
Total equity | ₪ 764 | 3,086 | |
Initial application of IFRS 15, Revenue from Contracts with Customers [Member] | In accordance with the previous policy [Member] | |||
Statement Line Items [Line Items] | |||
Net subscriber acquisition asset (stated as deferred expenses and non-current investments) | 4 | ||
Equity attributable to shareholders | 1,224 | ||
Non-controlling interests | 1,778 | ||
Total equity | 3,002 | ||
Initial application of IFRS 15, Revenue from Contracts with Customers [Member] | Change [Member] | |||
Statement Line Items [Line Items] | |||
Net subscriber acquisition asset (stated as deferred expenses and non-current investments) | 111 | ||
Equity attributable to shareholders | 22 | ||
Non-controlling interests | 62 | ||
Total equity | ₪ 84 | ||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Basis of Preparation (Details 4
Basis of Preparation (Details 4) - ILS (₪) ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | [1] | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement Line Items [Line Items] | ||||
Net cash from operating activities | ₪ 3,486 | ₪ 3,487 | ₪ 3,462 | |
Net cash used in investing activities | ₪ (2,618) | (1,128) | ₪ (948) | |
Initial application of IFRS 15, Revenue from Contracts with Customers [Member] | In accordance with the previous policy [Member] | ||||
Statement Line Items [Line Items] | ||||
Net cash from operating activities | 3,322 | |||
Net cash used in investing activities | (963) | |||
Initial application of IFRS 15, Revenue from Contracts with Customers [Member] | Change [Member] | ||||
Statement Line Items [Line Items] | ||||
Net cash from operating activities | 165 | |||
Net cash used in investing activities | ₪ (165) | |||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Basis of Preparation (Details 5
Basis of Preparation (Details 5) - ILS (₪) ₪ / shares in Units, ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | [1] | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement Line Items [Line Items] | ||||
General and operating expenses | ₪ 3,394 | ₪ 3,906 | ₪ 4,021 | |
Salaries | 1,995 | 2,007 | 2,015 | |
Depreciation and amortization expenses | 2,387 | 2,117 | 2,161 | |
Operating profit | (1,384) | 1,610 | 1,866 | |
Profit after financing expenses | (1,915) | 1,093 | 935 | |
Profit (loss) before income tax | (1,918) | 1,088 | 930 | |
Income tax | (59) | 347 | 442 | |
Net profit for the period | (1,859) | 741 | 488 | |
Profit attributable to shareholders of the Company | (1,029) | 78 | (236) | |
Profit (loss) attributable to non-controlling interests | ₪ (830) | ₪ 663 | ₪ 724 | |
Earnings per share (Basic and Diluted) | ₪ 2.62 | |||
Initial application of IFRS 15, Revenue from Contracts with Customers [Member] | In accordance with the previous policy [Member] | ||||
Statement Line Items [Line Items] | ||||
General and operating expenses | ₪ 4,037 | |||
Salaries | 2,041 | |||
Depreciation and amortization expenses | 2,063 | |||
Operating profit | 1,499 | |||
Profit after financing expenses | 982 | |||
Profit (loss) before income tax | 977 | |||
Income tax | 320 | |||
Net profit for the period | 657 | |||
Profit attributable to shareholders of the Company | 56 | |||
Profit (loss) attributable to non-controlling interests | ₪ 601 | |||
Earnings per share (Basic and Diluted) | ₪ 1.88 | |||
Initial application of IFRS 15, Revenue from Contracts with Customers [Member] | Change [Member] | ||||
Statement Line Items [Line Items] | ||||
General and operating expenses | ₪ (131) | |||
Salaries | (34) | |||
Depreciation and amortization expenses | 54 | |||
Operating profit | 111 | |||
Profit after financing expenses | 111 | |||
Profit (loss) before income tax | 111 | |||
Income tax | 27 | |||
Net profit for the period | 84 | |||
Profit attributable to shareholders of the Company | 22 | |||
Profit (loss) attributable to non-controlling interests | ₪ 62 | |||
Earnings per share (Basic and Diluted) | ₪ 0.74 | |||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Basis of Preparation (Details T
Basis of Preparation (Details Textual) - ILS (₪) ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Basis of Preparation (Textual) | |||
Foreige exchange rate, description | NIS 3.748 = US$ 1.00 | ||
Right-of-use assets | ₪ 1,504 | [1] | |
Description of measurement of the lease liabilities | The discount rates used to measure lease liabilities range between 1.3% and 3.6% (weighted average of 1.5%). | ||
Minimum contractual lease payments | ₪ 1,020 | ||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Significant Accounting Polici_4
Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Fixed line and international network equipment (switches, transmission, power) [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 4 to 12 |
Subscriber equipment and installations [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 4-8 |
Equipment and infrastructure for multichannel television [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 3-15 |
Vehicles [member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 6-7 |
Office and general equipment [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 5-10 |
Electronic equipment, computers and internal communication systems [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 3-7 |
Cellular network [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 4-10 |
Passive radio equipment at cellular network sites [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | up to December 31, 2037 |
Buildings [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 25 |
Seabed cable [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 4-25 (mainly 25) |
Network [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 12 to 33 |
Significant Accounting Polici_5
Significant Accounting Policies (Details 1) | 12 Months Ended |
Dec. 31, 2018 | |
Customer relationships [Member] | |
Significant Accounting Policies [Line Items] | |
Amortization methods and estimated useful lives | 5 - 7 years based on the estimated customer churn rate (using the accelerated depreciation method) |
Brand acquired in a business combination [Member] | |
Significant Accounting Policies [Line Items] | |
Amortization methods and estimated useful lives | 12 |
Frequency usage rights [Member] | |
Significant Accounting Policies [Line Items] | |
Amortization methods and estimated useful lives | Over the term of the license up to 2028 |
Computer programs and software licenses [Member] | |
Significant Accounting Policies [Line Items] | |
Amortization methods and estimated useful lives | 3 - 10 years according to the term of the license or the estimated time of use of the software |
Significant Accounting Polici_6
Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2018 | |
Cellular communications sites [Member] | |
Statement Line Items [Line Items] | |
Weighted average of depreciation | 6.5 |
Buildings [Member] | |
Statement Line Items [Line Items] | |
Weighted average of depreciation | 7 |
Vehicles [Member] | |
Statement Line Items [Line Items] | |
Weighted average of depreciation | 2 |
Significant Accounting Polici_7
Significant Accounting Policies (Details Textual) | 12 Months Ended |
Dec. 31, 2018 | |
Significant Accounting Policies (Textual) | |
Description of legal claims | Contingent liabilities are accounted for according to IAS 37 and its related provisions. Accordingly, the claims are classified by likelihood of realization of the exposure to risk, as follows: a. More likely than not - more than 50% probability b. Possible - probability higher than unlikely and less than 50% c. Remote - probability of 10% or less. |
Top of range [member] | |
Significant Accounting Policies (Textual) | |
Expected useful life of service received | 4 years |
Bottom of range [member] | |
Significant Accounting Policies (Textual) | |
Expected useful life of service received | 1 month |
Segment Reporting (Details)
Segment Reporting (Details) - ILS (₪) ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Total revenue | ₪ 9,321 | [1] | ₪ 9,789 | ₪ 10,084 |
Depreciation and amortization | 2,387 | [1] | 2,117 | 2,161 |
Segment results - operating income | (635) | [1] | (20) | (21) |
Total financing income (expense), net | 69 | 123 | ||
Segment profit (loss) before income tax | (1,918) | [1] | 1,088 | 930 |
Income tax | 311 | 438 | 437 | |
Segment results - net profit (loss) | (1,859) | [1] | 741 | 488 |
Additional information: | ||||
Segment assets | 19,375 | [1] | 20,639 | |
Investment in equity-accounted investee | 11 | |||
Segment liabilities | 18,611 | [1] | 17,553 | |
Cellular Communications [Member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue from external entities | 2,401 | 2,500 | 2,587 | |
Inter-segment revenues | 42 | 46 | 43 | |
Total revenue | 2,443 | 2,546 | 2,630 | |
Depreciation and amortization | 655 | 383 | 380 | |
Segment results - operating income | (2) | 72 | 32 | |
Finance income | 56 | 54 | 52 | |
Finance expenses | (22) | (3) | (6) | |
Total financing income (expense), net | 34 | 51 | 46 | |
Segment profit (loss) after finance expenses, net | 32 | 123 | 78 | |
Share in profit (loss) of equity-accounted investee | ||||
Segment profit (loss) before income tax | 32 | 123 | 78 | |
Income tax | 8 | 28 | 17 | |
Segment results - net profit (loss) | 24 | 95 | 61 | |
Additional information: | ||||
Segment assets | 4,124 | 3,271 | 3,294 | |
Goodwill | ||||
Investment in equity-accounted investee | ||||
Segment liabilities | 1,425 | 536 | 569 | |
Investments in property, plant and equipment and intangible assets | 346 | 331 | 277 | |
International Communications And Internet Services [Member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue from external entities | 1,338 | 1,466 | 1,478 | |
Inter-segment revenues | 53 | 71 | 70 | |
Total revenue | 1,391 | 1,537 | 1,548 | |
Depreciation and amortization | 194 | 135 | 137 | |
Segment results - operating income | 116 | 174 | 176 | |
Finance income | 1 | 4 | 5 | |
Finance expenses | (16) | (12) | (15) | |
Total financing income (expense), net | (15) | (8) | (10) | |
Segment profit (loss) after finance expenses, net | 101 | 166 | 166 | |
Share in profit (loss) of equity-accounted investee | 1 | 1 | ||
Segment profit (loss) before income tax | 102 | 166 | 167 | |
Income tax | 25 | 39 | 42 | |
Segment results - net profit (loss) | 77 | 127 | 125 | |
Additional information: | ||||
Segment assets | 1,332 | 1,199 | 1,177 | |
Goodwill | 6 | 6 | 6 | |
Investment in equity-accounted investee | 6 | 5 | 5 | |
Segment liabilities | 567 | 410 | 380 | |
Investments in property, plant and equipment and intangible assets | 137 | 169 | 126 | |
Multi-Channel Television [Member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue from external entities | 1,473 | 1,650 | 1,745 | |
Inter-segment revenues | ||||
Total revenue | 1,473 | 1,650 | 1,745 | |
Depreciation and amortization | 323 | 285 | 296 | |
Segment results - operating income | (56) | 163 | 264 | |
Finance income | 27 | 10 | 13 | |
Finance expenses | (16) | (81) | (539) | |
Total financing income (expense), net | 11 | (71) | (526) | |
Segment profit (loss) after finance expenses, net | (45) | 92 | (262) | |
Share in profit (loss) of equity-accounted investee | ||||
Segment profit (loss) before income tax | (45) | 92 | (262) | |
Income tax | 3 | 336 | (330) | |
Segment results - net profit (loss) | (48) | (244) | 68 | |
Additional information: | ||||
Segment assets | 1,606 | 1,502 | 2,026 | |
Goodwill | ||||
Investment in equity-accounted investee | ||||
Segment liabilities | 687 | 1,154 | 1,434 | |
Investments in property, plant and equipment and intangible assets | 318 | 237 | 227 | |
Operating Segments Others [Member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue from external entities | 226 | 220 | 198 | |
Inter-segment revenues | 15 | 17 | 20 | |
Total revenue | 241 | 237 | 218 | |
Depreciation and amortization | 21 | 20 | 16 | |
Segment results - operating income | (36) | (20) | (34) | |
Finance income | 5 | 4 | ||
Finance expenses | (2) | |||
Total financing income (expense), net | 5 | 2 | ||
Segment profit (loss) after finance expenses, net | (36) | (15) | (32) | |
Share in profit (loss) of equity-accounted investee | (4) | (4) | (5) | |
Segment profit (loss) before income tax | (40) | (19) | (37) | |
Income tax | ||||
Segment results - net profit (loss) | (40) | (19) | (37) | |
Additional information: | ||||
Segment assets | 157 | 174 | 193 | |
Goodwill | 10 | 10 | ||
Investment in equity-accounted investee | 3 | (6) | 1 | |
Segment liabilities | 84 | 64 | 104 | |
Investments in property, plant and equipment and intangible assets | 13 | 19 | 13 | |
Operating Segments Adjustments [Member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue from external entities | [2] | |||
Inter-segment revenues | (423) | [2] | (425) | (440) |
Total revenue | (423) | [2] | (425) | (440) |
Depreciation and amortization | 345 | [2] | 566 | 615 |
Segment results - operating income | (2,630) | [2] | (750) | (648) |
Finance income | (27) | [2] | 19 | |
Finance expenses | (64) | [2] | (51) | (17) |
Total financing income (expense), net | (91) | [2] | (91) | 2 |
Segment profit (loss) after finance expenses, net | (2,721) | [2] | (841) | (646) |
Share in profit (loss) of equity-accounted investee | [2] | (1) | (1) | |
Segment profit (loss) before income tax | (2,721) | [2] | (822) | (647) |
Income tax | (282) | [2] | (452) | 314 |
Segment results - net profit (loss) | (2,439) | [2] | (390) | (961) |
Additional information: | ||||
Segment assets | 971 | [2] | 2,460 | 3,260 |
Goodwill | 2,274 | [2] | 2,921 | 3,050 |
Investment in equity-accounted investee | [2] | 11 | 12 | |
Segment liabilities | 1,564 | [2] | 1,488 | 2,369 |
Investments in property, plant and equipment and intangible assets | [2] | |||
Operating Segments Consolidated [Member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue from external entities | 9,321 | 9,789 | 10,071 | |
Inter-segment revenues | 13 | |||
Total revenue | 9,321 | 9,789 | 10,084 | |
Depreciation and amortization | 2,388 | 2,117 | 2,161 | |
Segment results - operating income | (1,384) | 1,610 | 1,866 | |
Finance income | 89 | 69 | 123 | |
Finance expenses | (620) | (586) | (1,054) | |
Total financing income (expense), net | (531) | (517) | (931) | |
Segment profit (loss) after finance expenses, net | (1,915) | 1,093 | 935 | |
Share in profit (loss) of equity-accounted investee | (3) | (5) | (5) | |
Segment profit (loss) before income tax | (1,918) | 1,088 | 930 | |
Income tax | (59) | 347 | 442 | |
Segment results - net profit (loss) | (1,859) | 741 | 488 | |
Additional information: | ||||
Segment assets | 17,086 | 17,692 | 17,061 | |
Goodwill | 2,280 | 2,937 | 3,066 | |
Investment in equity-accounted investee | 9 | 10 | 18 | |
Segment liabilities | 18,611 | 17,553 | 16,844 | |
Investments in property, plant and equipment and intangible assets | 1,716 | 1,607 | 1,471 | |
Domestic Fixed Line Communications [Member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue from external entities | 3,883 | 3,953 | 4,063 | |
Inter-segment revenues | 313 | 291 | 320 | |
Total revenue | 4,196 | 4,244 | 4,383 | |
Depreciation and amortization | 850 | 728 | 717 | |
Segment results - operating income | 1,224 | 1,971 | 2,076 | |
Finance income | 32 | 36 | 30 | |
Finance expenses | (502) | (439) | (475) | |
Total financing income (expense), net | (470) | (403) | (445) | |
Segment profit (loss) after finance expenses, net | 754 | 1,568 | 1,631 | |
Share in profit (loss) of equity-accounted investee | ||||
Segment profit (loss) before income tax | 754 | 1,568 | 1,631 | |
Income tax | 187 | 396 | 399 | |
Segment results - net profit (loss) | 567 | 1,172 | 1,232 | |
Additional information: | ||||
Segment assets | 8,896 | 9,086 | 7,111 | |
Goodwill | ||||
Investment in equity-accounted investee | ||||
Segment liabilities | 14,284 | 13,901 | 11,988 | |
Investments in property, plant and equipment and intangible assets | ₪ 902 | ₪ 851 | ₪ 828 | |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. | |||
[2] | The results of the multi-channel television segment, the cellular communications segment and the International communications and internet services segments are presented net of the impairment losses set out in Note 9. These impairment losses are presented as part of the adjustments. |
Segment Reporting (Details 1)
Segment Reporting (Details 1) - ILS (₪) ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Revenue | ||||
Revenue from reporting segments | ₪ 9,503 | ₪ 9,977 | ₪ 10,306 | |
Revenue from other segments | 241 | 237 | 218 | |
Elimination of revenue from inter-segment sales except for revenue from sales to an associate reporting as a segment | (423) | (425) | (440) | |
Consolidated revenue | 9,321 | [1] | 9,789 | 10,084 |
Profit or loss | ||||
Operating income for reporting segments | 1,282 | 2,380 | 2,548 | |
Financing expenses, net | (531) | (517) | (931) | |
Share in the losses (profit) of equity-accounted investees | (3) | [1] | (5) | (5) |
Profit (loss) from operations classified in other categories | (36) | (20) | (34) | |
Depreciation and amortization of intangible assets resulting from the Bezeq PPA adjustments | (975) | (733) | (635) | |
Loss from impairment of assets (see Note 9) | (1,638) | |||
Other adjustments | (17) | (17) | (13) | |
Segment profit (loss) before income tax | (1,918) | [1] | 1,088 | ₪ 930 |
Assets | ||||
Assets from reporting segments | 15,970 | 15,069 | ||
Assets attributable to operations in other categories | 159 | 178 | ||
Goodwill not attributable to segment assets | 2,274 | 2,921 | ||
Loss from impairment of assets | (1,638) | |||
PPA not attributable to reporting segment | 1,166 | 1,636 | ||
Assets resulting from the Bezeq PPA, net | 1,477 | 1,678 | ||
Assets attributable to a non-reportable segment | (33) | (843) | ||
Consolidated assets | 19,375 | [1] | 20,639 | |
Liabilities | ||||
Liabilities from reporting segments | 16,963 | 16,001 | ||
Liabilities attributable to operations in other categories | 84 | 64 | ||
Inter-segment liabilities | (1,158) | (1,360) | ||
Liabilities resulting from the Bezeq PPA, net | 247 | 386 | ||
Liabilities attributable to a non-reportable segment | 2,475 | 2,462 | ||
Consolidated liabilities | ₪ 18,611 | [1] | ₪ 17,553 | |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash and Cash Equivalents (Textual) | ||
Maturity term | 90 days | 90 days |
Investments (Details)
Investments (Details) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Current investments | |||
Investments in marketable securities at fair value | ₪ 396 | ₪ 321 | |
Bank deposits | 1,384 | 275 | |
Current investments | ₪ 1,780 | [1] | ₪ 596 |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Trade and Other Receivables (De
Trade and Other Receivables (Details) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | ||
Trade receivables, net | ||||
Outstanding debts | [1] | ₪ 709 | ₪ 765 | |
Credit cards and checks receivable | [1] | 396 | 428 | |
Unbilled receivables | [1] | 237 | 235 | |
Current maturities of long-term receivables | [1] | 420 | 472 | |
Related parties | [1] | 11 | 15 | |
Total trade receivables | 1,773 | [1] | 1,915 | |
Other receivables and current tax assets | ||||
Prepaid expenses | 34 | 66 | ||
Current tax assets | 104 | 2 | ||
Other receivables (mainly from real estate sales) | 131 | 202 | ||
Total other receivables | 269 | 270 | ||
Long-term trade and other receivables | ||||
Trade receivables- open debts | [1],[2] | 339 | 387 | |
Long term receivables (from real estate sales) | 131 | 106 | ||
Long-term trade and other receivables | 470 | 493 | ||
Trade receivables, net | ₪ 2,512 | ₪ 2,678 | ||
[1] | The amount of trade receivables is stated net of the provision for doubtful debts. | |||
[2] | Discounted interest rates for long-term trade receivables are based the estimated credit risk of trade receivables. The discounted interest rates used by the Bezeq Group in 2018 are 3.4% - 4.6% (in 2017: 3.4% - 3.5%). |
Trade and Other Receivables (_2
Trade and Other Receivables (Details 1) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Trade and other receivables [abstract] | |||
2019 | ₪ 329 | ||
2020 | 90 | ||
2021 and thereafter | 51 | ||
Total | ₪ 470 | [1] | ₪ 493 |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Trade and Other Receivables (_3
Trade and Other Receivables (Details 2) - ILS (₪) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Trade and other receivables [abstract] | ||
Balance at January 1 | ₪ 92 | ₪ 111 |
Impaired loss recognized | ₪ 23 | ₪ 20 |
Bad debts | (28) | (39) |
Balance at December 31 | ₪ 87 | ₪ 92 |
Trade and Other Receivables (_4
Trade and Other Receivables (Details 3) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Gross | ||
Not past due | ₪ 1,971 | ₪ 2,153 |
Past due up to one year | 151 | 165 |
Past due one to two years | 38 | 44 |
Past due more than two years | 39 | 32 |
Total | 2,199 | 2,394 |
Impairment | ||
Not past due | (5) | (6) |
Past due up to one year | (34) | (37) |
Past due one to two years | (16) | (27) |
Past due more than two years | (32) | (22) |
Total | ₪ (87) | ₪ (92) |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - ILS (₪) ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Cost | ||||
Beginning Balance | ₪ 16,851 | ₪ 15,751 | ||
Additions | 1,275 | 1,188 | ||
Disposals | (27) | (88) | ||
Transfer to Investment property | (22) | |||
Ending Balance | 18,077 | 16,851 | ₪ 15,751 | |
Depreciation and impairment losses | ||||
Begining Balance | 9,911 | 8,679 | ||
Depreciation for the year | 537 | 496 | ||
Loss from impairment of assets | (1,638) | |||
Ending Balance | 11,764 | 9,911 | 8,679 | |
Carrying amounts | ||||
Begining Balance | 6,940 | 7,072 | ||
Ending Balance | 6,313 | [1] | 6,940 | 7,072 |
Land and buildings [Member] | ||||
Cost | ||||
Beginning Balance | 1,004 | 1,051 | ||
Additions | 22 | 34 | ||
Disposals | (2) | (81) | ||
Transfer to Investment property | (22) | |||
Ending Balance | 1,002 | 1,004 | 1,051 | |
Depreciation and impairment losses | ||||
Begining Balance | 455 | 402 | ||
Depreciation for the year | 73 | 53 | ||
Loss from impairment of assets | 22 | |||
Ending Balance | 550 | 455 | 402 | |
Carrying amounts | ||||
Begining Balance | 549 | 649 | ||
Ending Balance | 452 | 549 | 649 | |
Switching Transmission, power, Cellular, And satellite equipment [Member] | ||||
Cost | ||||
Beginning Balance | 5,865 | 5,457 | ||
Additions | 396 | 408 | ||
Disposals | ||||
Ending Balance | 6,261 | 5,865 | 5,457 | |
Depreciation and impairment losses | ||||
Begining Balance | 3,953 | 3,472 | ||
Depreciation for the year | 481 | 481 | ||
Loss from impairment of assets | ||||
Ending Balance | 4,434 | 3,953 | 3,472 | |
Carrying amounts | ||||
Begining Balance | 1,912 | 1,985 | ||
Ending Balance | 1,827 | 1,912 | 1,985 | |
Network equipment [Member] | ||||
Cost | ||||
Beginning Balance | 5,968 | 5,740 | ||
Additions | 213 | 228 | ||
Disposals | ||||
Ending Balance | 6,181 | 5,968 | 5,740 | |
Depreciation and impairment losses | ||||
Begining Balance | 2,940 | 2,736 | ||
Depreciation for the year | 210 | 204 | ||
Loss from impairment of assets | ||||
Ending Balance | 3,150 | 2,940 | 2,736 | |
Carrying amounts | ||||
Begining Balance | 3,028 | 3,004 | ||
Ending Balance | 3,031 | 3,028 | 3,004 | |
Multi- channel equipment and infrastructure [Member] | ||||
Cost | ||||
Beginning Balance | 1,200 | 1,036 | ||
Additions | 247 | 165 | ||
Disposals | (1) | (1) | ||
Ending Balance | 1,446 | 1,200 | 1,036 | |
Depreciation and impairment losses | ||||
Begining Balance | 591 | 369 | ||
Depreciation for the year | 214 | 222 | ||
Loss from impairment of assets | 526 | |||
Ending Balance | 1,331 | 591 | 369 | |
Carrying amounts | ||||
Begining Balance | 609 | 667 | ||
Ending Balance | 115 | 609 | 667 | |
Subscriber equipment [Member] | ||||
Cost | ||||
Beginning Balance | 1,738 | 1,464 | ||
Additions | 311 | 278 | ||
Disposals | (15) | (4) | ||
Ending Balance | 2,034 | 1,738 | 1,464 | |
Depreciation and impairment losses | ||||
Begining Balance | 1,140 | 953 | ||
Depreciation for the year | 215 | 187 | ||
Loss from impairment of assets | ||||
Ending Balance | 1,355 | 1,140 | 953 | |
Carrying amounts | ||||
Begining Balance | 598 | 511 | ||
Ending Balance | 679 | 598 | 511 | |
Office equipment, computers and vehicles [Member] | ||||
Cost | ||||
Beginning Balance | 1,076 | 1,003 | ||
Additions | 86 | 75 | ||
Disposals | (9) | (2) | ||
Ending Balance | 1,153 | 1,076 | 1,003 | |
Depreciation and impairment losses | ||||
Begining Balance | 832 | 747 | ||
Depreciation for the year | 84 | 85 | ||
Loss from impairment of assets | 28 | |||
Ending Balance | 944 | 832 | 747 | |
Carrying amounts | ||||
Begining Balance | 244 | 256 | ||
Ending Balance | ₪ 209 | ₪ 244 | ₪ 256 | |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Property, Plant and Equipment_3
Property, Plant and Equipment (Details Textual) - ILS (₪) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment (Textual) | ||
Residual value | ₪ 168 | ₪ 188 |
Derecognized fully depreciated property at a cost | ₪ 537 | ₪ 496 |
Option extension term | 49 years |
Intangible Assets (Details)
Intangible Assets (Details) - ILS (₪) ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Cost | |||
Beginning Balance | ₪ 5,840 | ₪ 13,073 | |
Acquisitions or additions from independent development | 220 | 227 | |
Disposals | (12) | (48) | |
Ending Balance | 4,227 | [1] | 5,840 |
Amortization and impairment losses | |||
Beginning Balance | 7,412 | 6,539 | |
Amortization for the year | 542 | 786 | |
Impairment losses | 1,279 | 129 | |
Disposals | (42) | ||
Ending Balance | 9,233 | 7,412 | |
Carrying amounts | |||
Beginning Balance | 5,840 | 6,534 | |
Ending Balance | 4,227 | 5,840 | |
Goodwills [Member] | |||
Cost | |||
Beginning Balance | 3,066 | 3,066 | |
Acquisitions or additions from independent development | |||
Disposals | |||
Ending Balance | 3,066 | 3,066 | |
Amortization and impairment losses | |||
Beginning Balance | 129 | ||
Amortization for the year | |||
Impairment losses | 659 | 129 | |
Disposals | |||
Ending Balance | 788 | 129 | |
Carrying amounts | |||
Beginning Balance | 2,937 | 3,066 | |
Ending Balance | 2,278 | 2,937 | |
Computer Softwares [Member] | |||
Cost | |||
Beginning Balance | 2,006 | 1,779 | |
Acquisitions or additions from independent development | 220 | 227 | |
Disposals | (12) | ||
Ending Balance | 2,214 | 2,006 | |
Amortization and impairment losses | |||
Beginning Balance | 1,456 | 1,238 | |
Amortization for the year | 226 | 218 | |
Impairment losses | 104 | ||
Disposals | |||
Ending Balance | 1,786 | 1,456 | |
Carrying amounts | |||
Beginning Balance | 550 | 541 | |
Ending Balance | 428 | 550 | |
Right Of Use Asset [Member] | |||
Cost | |||
Beginning Balance | 480 | 480 | |
Acquisitions or additions from independent development | |||
Disposals | |||
Ending Balance | 480 | 480 | |
Amortization and impairment losses | |||
Beginning Balance | 271 | 242 | |
Amortization for the year | 20 | 29 | |
Impairment losses | |||
Disposals | |||
Ending Balance | 291 | 271 | |
Carrying amounts | |||
Beginning Balance | 209 | 238 | |
Ending Balance | 189 | 209 | |
Customer Related Intangible Asset [Member] | |||
Cost | |||
Beginning Balance | 7,479 | 7,479 | |
Acquisitions or additions from independent development | |||
Disposals | |||
Ending Balance | 7,479 | 7,479 | |
Amortization and impairment losses | |||
Beginning Balance | 5,356 | 4,826 | |
Amortization for the year | 290 | 530 | |
Impairment losses | 505 | ||
Disposals | |||
Ending Balance | 6,151 | 5,356 | |
Carrying amounts | |||
Beginning Balance | 2,123 | 2,653 | |
Ending Balance | 1,328 | 2,123 | |
Other Intangible Asset [Member] | |||
Cost | |||
Beginning Balance | 221 | 269 | |
Acquisitions or additions from independent development | |||
Disposals | (48) | ||
Ending Balance | 221 | 221 | |
Amortization and impairment losses | |||
Beginning Balance | 200 | 233 | |
Amortization for the year | 6 | 9 | |
Impairment losses | 11 | ||
Disposals | (42) | ||
Ending Balance | 217 | 200 | |
Carrying amounts | |||
Beginning Balance | 21 | 36 | |
Ending Balance | ₪ 4 | ₪ 21 | |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | ₪ 2,278 | ₪ 2,937 |
Domestic fixed-line communications [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | 1,548 | 1,548 |
Cellular communications [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | 685 | 1,163 |
Multi-channel television [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | 33 | |
International communications and internet services [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | 40 | 181 |
Walla communications [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | 7 | |
Others [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | ₪ 5 | ₪ 5 |
Intangible Assets (Details 2)
Intangible Assets (Details 2) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Intangible assets and goodwill [abstract] | |||
Broadcasting rights, net of rights exercised | ₪ 403 | ||
Fixed assets | 559 | ||
Intangible assets | 106 | ||
Subscriber acquisition (assessed under IFRS 15) | 29 | ||
Rights of use for leased assets | 1,504 | [1] | |
Total impairment recognized in the statements of DBS | 1,100 | ||
Customer relations and branding | 505 | ||
Goodwill | 33 | ||
Total impairment loss of assets | 1,638 | ||
Write-off of deferred tax attributed to customer relations and branding | (114) | ||
Write-off of deferred tax attributed to customer relations and branding | ₪ 1,524 | ||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - ILS (₪) ₪ in Millions | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Intangible Assets (Textual) | |||||
Impairment loss | ₪ 2,294 | [1] | ₪ 129 | ||
International Communications And Internet Services [Member] | |||||
Intangible Assets (Textual) | |||||
Nominal capital rate | 10.25% | ||||
Permanent growth rate | 3.00% | ||||
Recoverable amount | ₪ 1,200 | ||||
Impairment loss | 140 | ||||
Carrying amount | 461 | ||||
Walla Communications [Member] | |||||
Intangible Assets (Textual) | |||||
Impairment loss | ₪ 37 | ||||
Cellular Telephone [Member] | |||||
Intangible Assets (Textual) | |||||
Nominal capital rate | 9.25% | ||||
Permanent growth rate | 3.00% | ||||
Recoverable amount | ₪ 5,342 | ||||
Impairment loss | ₪ 333 | 145 | |||
Carrying amount | ₪ 476 | ||||
ifrs-full:TechnologybasedIntangibleAssetsMember | |||||
Intangible Assets (Textual) | |||||
Nominal capital rate | 7.75% | ||||
Permanent growth rate | 1.00% | ||||
Multi-Channel Television [Member] | |||||
Intangible Assets (Textual) | |||||
Nominal capital rate | 8.50% | ||||
Permanent growth rate | 0.00% | ||||
Recoverable amount | ₪ 1,638 | ||||
Impairment loss | 1,638 | ||||
Carrying amount | 871 | ||||
Tax reserve | ₪ 1,524 | ||||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Deferred Expenses and Non-Cur_3
Deferred Expenses and Non-Current Investments (Details) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | ||
Deferred Expenses and Non-Current Investments [Abstract] | ||||
Deferred expenses | [1] | ₪ 270 | ₪ 314 | |
Customer acquisition asset, net | [2] | 142 | 115 | |
Deposit used as collateral against hedging transactions | [3] | 41 | 67 | |
Bank deposit for loans to Company employees | [4] | 48 | 51 | |
Investments in equity-accounted investees | 8 | 11 | ||
Total | ₪ 509 | [5] | ₪ 558 | |
[1] | For its operations, Bezeq International acquires indefeasible rights of use ("IRU") from Mediterranean Nautilus (Israel) Ltd. for the acquisition of seabed cable capacities, which are accounted for as service transactions. Under the contract, Bezeq International has the right of use of the capacities until 2022 with an option for an extension until 2027. The amount of the prepaid expense is amortized on a straight line until 2027. The balance of the liability for the agreement with Mediterranean Nautilus is US$ 13.1. | |||
[2] | Subscriber acquisition assets: | |||
[3] | A deposit used as collateral for hedging transactions is payable in December 2020. | |||
[4] | A bank deposit for loans to Company employees without a repayment date. | |||
[5] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Deferred Expenses and Non-Cur_4
Deferred Expenses and Non-Current Investments (Details 1) - ILS (₪) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cost | ||
Acquisition assets | ₪ 196 | ₪ 49 |
Additions | 164 | 165 |
Disposals | (27) | (18) |
Acquisition assets | 333 | 196 |
Amortization and impairment losses | ||
Amortization and impairment losses | 81 | 42 |
Depreciation | 108 | 57 |
Disposals | (27) | (18) |
Impairment loss | 29 | |
Amortization and impairment losses | 191 | 81 |
Carrying amount | ||
Acquisition assets | ₪ 142 | ₪ 115 |
Broadcasting Rights, Net of R_3
Broadcasting Rights, Net of Rights Exercised (Details) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Broadcast Rights, Net of Rights Exercised [Abstract] | ||
Cost | ₪ 1,010 | ₪ 797 |
Less rights exercised | (547) | (343) |
Impairment loss (see Note 9) | (403) | |
Total | ₪ 60 | ₪ 454 |
Investees (Details)
Investees (Details) | 12 Months Ended | |
Dec. 31, 2018 | ||
DBS [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 100.00% | |
DBS [Member] | Israel [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 100.00% | |
Bezeq International Ltd. [Member] | Israel [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 100.00% | |
B Communications (SP1) Ltd. and B Communications (SP2) Ltd. [Member] | Israel [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 100.00% | [1] |
Bezeq - The Israel Telecommunication Corp. Limited [Member] | Israel [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 26.34% | |
Pelephone Communications Ltd. [Member] | Israel [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 100.00% | |
Walla Communications Ltd. [Member] | Israel [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 100.00% | |
[1] | Held by B Communications (SP1) Ltd. |
Investees (Details 1)
Investees (Details 1) - Bezeq [Member] - ILS (₪) ₪ / shares in Units, ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
NIS 0.25 per share [Member] | |||
Disclosure of subsidiaries [line items] | |||
Dividend payable | ₪ 686 | ||
Dividend per share | ₪ 0.25 | ||
NIS 0.47 per share [Member] | |||
Disclosure of subsidiaries [line items] | |||
Dividend payable | 1,286 | ||
Dividend per share | ₪ 0.47 | ||
NIS 0.52 per share [Member] | |||
Disclosure of subsidiaries [line items] | |||
Dividend payable | ₪ 144 | ||
Dividend per share | ₪ 0.52 |
Investees (Details 2)
Investees (Details 2) - ILS (₪) ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Disclosure of subsidiaries [line items] | ||||
Current assets | ₪ 5,023 | [1] | ₪ 5,335 | |
Non-current assets | 14,352 | [1] | 15,304 | |
Current liabilities | 6,908 | [1] | 4,111 | |
Non-current liabilities | 11,703 | [1] | 13,442 | |
Total net assets | 19,375 | [1] | 20,639 | |
Carrying amount of non-controlling interests | 536 | [1] | 1,840 | |
Revenues | 9,321 | [1] | 9,789 | ₪ 10,084 |
Profit (loss) | (1,859) | [1] | 741 | 488 |
Other comprehensive Income (loss) | 42 | |||
Total comprehensive Income (loss) | (1,817) | [1] | 733 | 473 |
Profit (loss) attributable to non-controlling interests | (830) | [1] | 663 | 724 |
Total comprehensive Income (loss) attributable to non-controlling interests | (799) | [1] | 657 | 713 |
Cash flows from operating activities | 3,486 | [1] | 3,487 | 3,462 |
Cash flows from investing activities | (2,618) | [1] | (1,128) | (948) |
Cash flow from financing activities without dividend to non-controlling interests | (2,150) | [1] | (735) | (2,333) |
Dividend paid to non-controlling interests | 505 | [1] | 948 | 1,062 |
Total increase (decrease) in cash and cash equivalents | ₪ (1,282) | [1] | ₪ 1,624 | ₪ 181 |
Bcom Group [Member] | ||||
Disclosure of subsidiaries [line items] | ||||
Rate of direct ownership interests held by non-controlling interests | 73.66% | 73.66% | 73.66% | |
Current assets | ₪ 4,431 | ₪ 4,823 | ₪ 3,559 | |
Non-current assets | 11,892 | 12,026 | 13,083 | |
Current liabilities | 4,433 | 3,857 | 3,966 | |
Non-current liabilities | 11,456 | 10,848 | 10,270 | |
Total net assets | 434 | 2,144 | 2,406 | |
Carrying amount of non-controlling interests | 482 | 1,840 | 2,131 | |
Revenues | 9,321 | 9,789 | 10,084 | |
Profit (loss) | (1,859) | 858 | 989 | |
Other comprehensive Income (loss) | 42 | (8) | (15) | |
Total comprehensive Income (loss) | (1,817) | 850 | 974 | |
Profit (loss) attributable to non-controlling interests | (830) | 663 | 724 | |
Total comprehensive Income (loss) attributable to non-controlling interests | (799) | 657 | 713 | |
Cash flows from operating activities | 3,486 | 3,525 | 3,526 | |
Cash flows from investing activities | (2,618) | (1,148) | (1,567) | |
Cash flow from financing activities without dividend to non-controlling interests | (1,645) | 104 | (804) | |
Dividend paid to non-controlling interests | (505) | (948) | (1,062) | |
Total increase (decrease) in cash and cash equivalents | ₪ (1,282) | ₪ 1,533 | ₪ 93 | |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Investees (Details Textual)
Investees (Details Textual) - ILS (₪) ₪ in Millions | Mar. 06, 2018 | Aug. 04, 2009 | Dec. 31, 2018 | Feb. 28, 2018 | Jan. 21, 2018 | Sep. 30, 2016 | Mar. 25, 2015 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Oct. 10, 2018 | May 10, 2018 | |
Investees (Textual) | |||||||||||||
Dividend paid by Bezeq to non-controlling interests | ₪ 505 | ||||||||||||
Payments of debt estimated value | ₪ 43 | ||||||||||||
Impairment losses | 2,294 | [1] | 129 | ||||||||||
Operating loss | ₪ (1,384) | [1] | 1,610 | ₪ 1,866 | |||||||||
Bezeq [Member] | |||||||||||||
Investees (Textual) | |||||||||||||
Outstanding shares, percentage | 25.82% | 25.82% | |||||||||||
Outstanding shares held percentage | 0.52% | 0.52% | |||||||||||
Dividend paid by Bezeq to non-controlling interests | ₪ 505 | 948 | |||||||||||
Distributed cash dividend | ₪ 318 | ₪ 368 | |||||||||||
Distribute percentage of semi-annual profit | 70.00% | 100.00% | |||||||||||
Cash consideration | ₪ 497 | ||||||||||||
Bezeq [Member] | March 27, 2019 [Member] | |||||||||||||
Investees (Textual) | |||||||||||||
Registered share capital, description | Bezeq's Board of Directors approved the convening of a general meeting to approve an increase in Bezeq's registered share capital by one billion shares of NIS 1 par value each, as a preliminary measure before potential capital raising in the amount of NIS 2 billion by issuing rights. | ||||||||||||
Bezeq [Member] | March 2019 [Member] | |||||||||||||
Investees (Textual) | |||||||||||||
Additional investment | ₪ 70 | ||||||||||||
Bezeq [Member] | March 28, 2018 [Member] | |||||||||||||
Investees (Textual) | |||||||||||||
Distribution of cash dividend | ₪ 368 | ||||||||||||
B Communications Ltd [Member] | |||||||||||||
Investees (Textual) | |||||||||||||
Received share of dividend distribution | ₪ 97 | ₪ 84 | |||||||||||
DBS [Member] | |||||||||||||
Investees (Textual) | |||||||||||||
Description of DBS share capital | March 25, 2015, Bezeq held 49.78% of the share capital of DBS and it held options that confer the right to 8.6% in DBS shares, which Bezeq is unable to exercise. Eurocom DBS Ltd. held the balance of DBS shares. On March 25, 2015, Bezeq exercised the options that were allotted, for no consideration, and on June 24, 2016, Bezeq completed a transaction for the acquisition of the entire holdings of Eurocom DBS in DBS, and all of the owner's loans provided by Eurocom to DBS ("the Acquisition Transaction"). | ||||||||||||
Share capital, percentage | 49.78% | ||||||||||||
Percentage of acquired | 8.60% | ||||||||||||
Ownership interest | 100.00% | ||||||||||||
Cash consideration | ₪ 680 | ||||||||||||
Financing expenses recognized for elimination of debt balance of the advance payments | 43 | ||||||||||||
Converted debentures amount | ₪ 422 | ||||||||||||
Additional investment | 100 | ||||||||||||
Shareholders' loan | 97 | 97 | |||||||||||
Description of Eurocom DBS payments | Bezeq paid Eurocom DBS NIS 188 (plus interest differences of NIS 10) for the First Contingent Consideration, under the Assessment Agreement. | ||||||||||||
Impairment losses | 1,100 | ||||||||||||
Operating loss | 1,150 | ||||||||||||
DBS [Member] | February 13, 2019 [Member] | |||||||||||||
Investees (Textual) | |||||||||||||
Credit facility or capital investments amount | ₪ 250 | 250 | |||||||||||
DBS [Member] | Second Contingent Consideration [Member] | |||||||||||||
Investees (Textual) | |||||||||||||
Cash consideration | ₪ 170 | ||||||||||||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Investment Property (Details)
Investment Property (Details) - Bezeq [Member] - ILS (₪) ₪ in Millions | 1 Months Ended | |
Dec. 31, 2018 | Jan. 21, 2018 | |
Investment Property (Textual) | ||
Total consideration | ₪ 497 | |
Investment property, description | Which may increase up to NIS 550, if the purchaser, in accordance with its right under the agreement, postpones the date of payment of up to two thirds of the consideration until December 31, 2022. | |
Sakia property amount | ₪ 148 | |
Building committee for betterment tax | 1,435 | |
Account of demand | 112 | |
Deposited bank guarantee amount | 44 | |
Account of transaction | ₪ 155 |
Leases (Details)
Leases (Details) - ILS (₪) ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Cost | |||
Balance beginning | ₪ 1,520 | ||
Additions for new agreements | 320 | ||
Derecognition for terminated agreements | (65) | ||
Changes in agreements (mainly extension of the agreement periods) and revaluation | 102 | ||
Balance ending | 1,877 | ||
Amortization and impairment losses | |||
Balance beginning | |||
Amortization for the year | 423 | ||
Derecognition for terminated agreements | (31) | ||
Changes in agreements and other | (22) | ||
Impairment loss | 3 | ||
Balance ending | 373 | ||
Carrying amount, Balance | 1,504 | [1] | |
Communications sites [Member] | |||
Cost | |||
Balance beginning | 809 | ||
Additions for new agreements | 159 | ||
Derecognition for terminated agreements | (45) | ||
Changes in agreements (mainly extension of the agreement periods) and revaluation | 43 | ||
Balance ending | 966 | ||
Amortization and impairment losses | |||
Balance beginning | |||
Amortization for the year | 190 | ||
Derecognition for terminated agreements | (18) | ||
Changes in agreements and other | (3) | ||
Impairment loss | |||
Balance ending | 169 | ||
Carrying amount, Balance | 797 | 809 | |
Buildings [member] | |||
Cost | |||
Balance beginning | 538 | ||
Additions for new agreements | 15 | ||
Derecognition for terminated agreements | (9) | ||
Changes in agreements (mainly extension of the agreement periods) and revaluation | 81 | ||
Balance ending | 625 | ||
Amortization and impairment losses | |||
Balance beginning | |||
Amortization for the year | 120 | ||
Derecognition for terminated agreements | (4) | ||
Changes in agreements and other | (1) | ||
Impairment loss | |||
Balance ending | 115 | ||
Carrying amount, Balance | 510 | 538 | |
Vehicles [member] | |||
Cost | |||
Balance beginning | 173 | ||
Additions for new agreements | 146 | ||
Derecognition for terminated agreements | (11) | ||
Changes in agreements (mainly extension of the agreement periods) and revaluation | (22) | ||
Balance ending | 286 | ||
Amortization and impairment losses | |||
Balance beginning | |||
Amortization for the year | 113 | ||
Derecognition for terminated agreements | (9) | ||
Changes in agreements and other | (18) | ||
Impairment loss | 3 | ||
Balance ending | 89 | ||
Carrying amount, Balance | ₪ 197 | ₪ 173 | |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Leases (Details 1)
Leases (Details 1) - ILS (₪) ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Statement Line Items [Line Items] | |||
Balance beginning | ₪ 1,535 | ||
Additions for new agreements | 316 | ||
Liability for a lease | (34) | ||
Changes in agreements (mainly extension of the agreement periods) and revaluation | 130 | ||
Financing expenses for employee benefits | 26 | ||
Payments for a lease | (422) | ||
Balance ending | 1,551 | ||
Carrying amount | |||
Current maturities of a lease liability | 445 | [1] | |
Long-term liabilities for a lease | 1,106 | [1] | |
Communications sites [Member] | |||
Statement Line Items [Line Items] | |||
Balance beginning | 809 | ||
Additions for new agreements | 156 | ||
Liability for a lease | (27) | ||
Changes in agreements (mainly extension of the agreement periods) and revaluation | 48 | ||
Financing expenses for employee benefits | 14 | ||
Payments for a lease | (190) | ||
Balance ending | 810 | ||
Carrying amount | |||
Current maturities of a lease liability | 203 | ||
Long-term liabilities for a lease | 607 | ||
Buildings [Member] | |||
Statement Line Items [Line Items] | |||
Balance beginning | 538 | ||
Additions for new agreements | 14 | ||
Liability for a lease | (5) | ||
Changes in agreements (mainly extension of the agreement periods) and revaluation | 87 | ||
Financing expenses for employee benefits | 9 | ||
Payments for a lease | (124) | ||
Balance ending | 519 | ||
Carrying amount | |||
Current maturities of a lease liability | 124 | ||
Long-term liabilities for a lease | 395 | ||
Vehicles [Member] | |||
Statement Line Items [Line Items] | |||
Balance beginning | 188 | ||
Additions for new agreements | 146 | ||
Liability for a lease | (2) | ||
Changes in agreements (mainly extension of the agreement periods) and revaluation | (5) | ||
Financing expenses for employee benefits | 3 | ||
Payments for a lease | (108) | ||
Balance ending | 222 | ||
Carrying amount | |||
Current maturities of a lease liability | 118 | ||
Long-term liabilities for a lease | ₪ 104 | ||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Leases (Details 2)
Leases (Details 2) ₪ in Millions | Dec. 31, 2018ILS (₪) |
Disclosure of maturity analysis of operating lease payments [line items] | |
Repayment of lease | ₪ 1,659 |
Up to one year [Member] | |
Disclosure of maturity analysis of operating lease payments [line items] | |
Repayment of lease | 446 |
1-5 years [Member] | |
Disclosure of maturity analysis of operating lease payments [line items] | |
Repayment of lease | 852 |
More than five years [Member] | |
Disclosure of maturity analysis of operating lease payments [line items] | |
Repayment of lease | ₪ 361 |
Leases (Details Textual)
Leases (Details Textual) ₪ in Millions | 1 Months Ended |
Dec. 31, 2018ILS (₪) | |
Leases (Textual) | |
Agreement to lease, description | The agreement is for ten years and includes three option periods of up to 24 years and 8 months in the aggregate, as from January 1, 2021. |
Annual rent | ₪ 20 |
Debentures, Bank Loans and Cr_3
Debentures, Bank Loans and Credit (Details) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Current liabilities | |||
Total current liabilities | ₪ 6,908 | [1] | ₪ 4,111 |
Non-current liabilities | |||
Total non-current liabilities | 11,703 | [1] | 13,442 |
Total liabilities | 18,611 | [1] | 17,553 |
Debt Composition [Member] | |||
Current liabilities | |||
Current maturities of debentures | 3,376 | 1,166 | |
Current maturities of bank loans | 621 | 692 | |
Total current liabilities | 3,997 | 1,858 | |
Non-current liabilities | |||
Debentures | 5,537 | 8,036 | |
Bank loans | 4,100 | 4,401 | |
Total non-current liabilities | 9,637 | 12,437 | |
Total liabilities | ₪ 13,634 | ₪ 14,295 | |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Debentures, Bank Loans and Cr_4
Debentures, Bank Loans and Credit (Details 1) - ILS (₪) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | ₪ 13,396 | ₪ 14,051 |
Total interest-bearing liabilities, Carrying amount | 13,634 | 14,295 |
Loans from banks and others [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | 4,708 | 5,073 |
Total interest-bearing liabilities, Carrying amount | 4,721 | 5,093 |
Loans from banks and others [Member] | Unlinked - Fixed interest [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | 4,208 | 4,398 |
Total interest-bearing liabilities, Carrying amount | ₪ 4,221 | 4,418 |
Nominal interest rate | 2.40 to 6.85 | |
Loans from banks and others [Member] | Unlinked - Variable interest [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | ₪ 500 | 675 |
Total interest-bearing liabilities, Carrying amount | ₪ 500 | 675 |
Nominal interest rate | P-0.33 to P+0.2 | |
Debentures [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | ₪ 8,688 | 8,978 |
Total interest-bearing liabilities, Carrying amount | 8,913 | 9,202 |
Debentures [Member] | Unlinked - Fixed interest [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | 4,811 | 4,347 |
Total interest-bearing liabilities, Carrying amount | ₪ 4,863 | 4,379 |
Nominal interest rate | 3.60 to 6.65 | |
Debentures [Member] | Linked to the Israeli CPI - fixed interest [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | ₪ 3,290 | 3,897 |
Total interest-bearing liabilities, Carrying amount | ₪ 3,464 | 4,091 |
Nominal interest rate | 2.20 to 8.40 | |
Debentures [Member] | Unlinked - Variable interest [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | ₪ 587 | 734 |
Total interest-bearing liabilities, Carrying amount | ₪ 586 | ₪ 732 |
Nominal interest rate | Makam for one year + 1.4 |
Debentures, Bank Loans and Cr_5
Debentures, Bank Loans and Credit (Details 2) - ILS (₪) ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of reconciliation of liabilities arising from financing activities [line items] | |||
Balance, Beginning | ₪ 14,349 | ₪ 13,581 | |
Changes due to cash flows from financing activities | |||
Consideration from the issue of debentures and receipt of loans, less transaction costs | 1,139 | 2,635 | |
Repayment of debentures and loans | (1,793) | (1,813) | |
Interest paid | (523) | (537) | ₪ (915) |
Net cash generated from (used in) finance activities | (1,177) | 285 | |
Financing expenses recognized in the statement of income | 508 | 483 | |
Balance, Ending | 13,680 | 14,349 | 13,581 |
Debentures (including accrued interest) [Member] | |||
Disclosure of reconciliation of liabilities arising from financing activities [line items] | |||
Balance, Beginning | 9,235 | 9,637 | |
Changes due to cash flows from financing activities | |||
Consideration from the issue of debentures and receipt of loans, less transaction costs | 819 | 635 | |
Repayment of debentures and loans | (1,107) | (978) | |
Interest paid | (325) | (379) | |
Net cash generated from (used in) finance activities | (613) | (722) | |
Financing expenses recognized in the statement of income | 320 | 320 | |
Balance, Ending | 8,942 | 9,235 | 9,637 |
Loans (including accrued interest) [Member] | |||
Disclosure of reconciliation of liabilities arising from financing activities [line items] | |||
Balance, Beginning | 5,114 | 3,944 | |
Changes due to cash flows from financing activities | |||
Consideration from the issue of debentures and receipt of loans, less transaction costs | 320 | 2,000 | |
Repayment of debentures and loans | (686) | (835) | |
Interest paid | (198) | (158) | |
Net cash generated from (used in) finance activities | (564) | 1,007 | |
Financing expenses recognized in the statement of income | 188 | 163 | |
Balance, Ending | ₪ 4,738 | ₪ 5,114 | ₪ 3,944 |
Debentures, Bank Loans and Cr_6
Debentures, Bank Loans and Credit (Details Textual) ₪ / shares in Units, $ / shares in Units, ₪ in Millions, $ in Millions | Jan. 16, 2017ILS (₪) | Sep. 18, 2016ILS (₪) | May 26, 2016USD ($)$ / shares | Apr. 01, 2016ILS (₪) | Feb. 19, 2014USD ($) | Jan. 23, 2018ILS (₪) | Jan. 21, 2018ILS (₪) | Jan. 20, 2016USD ($) | Dec. 31, 2018ILS (₪) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | Dec. 31, 2018USD ($) | Dec. 31, 2017ILS (₪)₪ / shares | Dec. 31, 2016USD ($) | Dec. 31, 2016₪ / shares | Dec. 31, 2015USD ($) | Sep. 21, 2010ILS (₪) | |
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Nominal value | $ / shares | $ 1 | |||||||||||||||||
Repurchase of notes | ₪ 33 | ₪ 33 | ||||||||||||||||
Equity attributable to shareholders | ₪ 228 | [1] | ₪ 1,246 | |||||||||||||||
Amount of debentures and banks loans | 6,250 | |||||||||||||||||
Loan amount | 2,000 | |||||||||||||||||
Loans from financial institutions | 2,200 | |||||||||||||||||
Par value per share | ₪ / shares | ₪ 0.1 | ₪ 0.1 | ||||||||||||||||
Bezeq [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Aggregate consideration amount | ₪ 497 | |||||||||||||||||
USD [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Purchase notes, par value | $ | $ 186 | |||||||||||||||||
Equity attributable to shareholders | $ | $ 61 | |||||||||||||||||
Board of Directors [Member] | USD [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Debenture issued | $ | $ 50 | |||||||||||||||||
Extension and increase of repurchase program | $ | $ 50 | |||||||||||||||||
Purchase notes, par value | $ | $ 65 | $ 65 | ||||||||||||||||
Top of range [member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Range of purchase price | $ / shares | $ 1.07 | |||||||||||||||||
Bottom of range [member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Range of purchase price | $ / shares | $ 1 | |||||||||||||||||
Bezeq [Member] | Bank Loans [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Loan amount | 2,600 | |||||||||||||||||
Bezeq [Member] | Bezeqs Public Debenture [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Loans from financial institutions | ₪ 1,000 | |||||||||||||||||
Private Placements [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Debentures of private placement | ₪ 118 | |||||||||||||||||
Series B Debenture [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Debenture issued | ₪ 400 | |||||||||||||||||
Description of debentures | The Series B Debentures are denominated in NIS, bear interest at a fixed annual rate of 6.5% which is payable semi-annually on March 31 and September 30 of each of the years 2011 through 2019 (the first interest payment was made on March 31, 2011 and the last interest payment is payable on March 31, 2019). The principal of the Series B Debentures is payable in four equal installments on March 31 of each year starting from 2016. | |||||||||||||||||
Outstanding par value | ₪ 226 | |||||||||||||||||
Series B Debenture [Member] | January 2012 and August 2013 [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Additional debentures of private placement | 126 | |||||||||||||||||
Debenture par value | ₪ 180 | |||||||||||||||||
Series B Debenture [Member] | Israeli Institutional Investors [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Aggregate consideration amount | ₪ 162 | |||||||||||||||||
Series B Debenture [Member] | Private Placements [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Debentures of private placement | ₪ 148 | |||||||||||||||||
Series C Debenture [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Debenture par value | ₪ 1,900 | |||||||||||||||||
Debentures of private placement | ₪ 240 | |||||||||||||||||
Aggregate consideration amount | ₪ 118 | ₪ 249 | ||||||||||||||||
Description of debentures | Each of the first four instalments will be equal to 7.5% of the principal amount of the aggregate amount of the Series C Debentures issued and the last instalment will equal to 70% of such principal amount. The annual coupon of the Series C Debentures is 3.6% and is denominated in NIS. The interest on the outstanding principal of the Series C Debentures is payable in semi-annual payments on May 31 and November 30 of each year. | The annual coupon of the Series C debentures was increased by 0.25% from 3.6% to 3.85% as of December 3, 2018. | ||||||||||||||||
Outstanding par value | ₪ 2,240 | |||||||||||||||||
Description of transactions with related party | The Company undertook to refrain from creating in favor of any third party a lien of any ranking whatsoever over its direct and/or indirect holdings of 691,361,036 shares of Bezeq, including any of the rights accompanying such shares (hereinafter, the "Undertaken Shares") without the prior consent of the holders of the Series C Debentures by a special resolution (hereinafter, "Negative Lien Undertaking"). | |||||||||||||||||
Financial debt amount (principal) | ₪ 400 | |||||||||||||||||
Additional debt amount | ₪ 2,300 | |||||||||||||||||
Percentage of issued and paid-up capital | 25.00% | |||||||||||||||||
Equity attributable to shareholders | ₪ 650 | |||||||||||||||||
Repayment of dividend | 75.00% | |||||||||||||||||
Senior Secured Notes [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Percentage of interest paid | 7.375 | |||||||||||||||||
Debentures due date | 2021 | |||||||||||||||||
Senior Secured Notes [Member] | USD [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Debenture issued | $ | $ 800 | |||||||||||||||||
Series 9-10 [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Amount of debentures and banks loans | ₪ 3,100 | |||||||||||||||||
Loans from financial institutions | 1,300 | |||||||||||||||||
Series 9-10 [Member] | Bezeq [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Loans from financial institutions | 1,000 | |||||||||||||||||
Restriction Shares [Member] | ||||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | ||||||||||||||||||
Equity post-distribution | ₪ 800 | |||||||||||||||||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Trade and Other Payables (Detai
Trade and Other Payables (Details) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | ||
Trade and other current payables [abstract] | ||||
Open accounts | [1] | ₪ 862 | ₪ 1,041 | |
Checks payable | 21 | 21 | ||
Trade payables | 883 | 1,062 | ||
Trade payables consisting of related parties | 2 | 31 | ||
Other payables including derivatives: | ||||
Liabilities to employees and other liabilities for salaries | 352 | 355 | ||
Advance payment for Sakia property (see Note 13) | 155 | |||
Institutions | 82 | 87 | ||
Accrued interest | 47 | 53 | ||
Deferred income | 103 | 90 | ||
Derivatives | 43 | 54 | ||
Other payables | 37 | 18 | ||
Total other payables including derivatives | 819 | 657 | ||
Trade and other payables | ₪ 1,702 | [2] | ₪ 1,719 | |
[1] | Of which, the carrying amount of trade payables that are related parties as at December 31, 2018 amounts to NIS 2 (as at December 31, 2017 - NIS 31). | |||
[2] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Trade and Other Payables (Det_2
Trade and Other Payables (Details Textual) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Trade and Other Payables [Textual] | ||
Payables to related parties | ₪ 2 | ₪ 31 |
Provisions (Details)
Provisions (Details) - ILS (₪) ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Disclosure of other provisions [line items] | |||
Balance as at January 1, 2018 | ₪ 134 | ||
Provisions created | 100 | ||
Provisions used | (8) | ||
Provisions cancelled | (13) | ||
Current | 175 | [1] | ₪ 94 |
Non-current | 38 | [1] | ₪ 40 |
Customer [Member] | |||
Disclosure of other provisions [line items] | |||
Balance as at January 1, 2018 | 59 | ||
Provisions created | 84 | ||
Provisions used | (6) | ||
Provisions cancelled | (3) | ||
Current | 134 | ||
Non-current | |||
Additional legal claims [Member] | |||
Disclosure of other provisions [line items] | |||
Balance as at January 1, 2018 | 28 | ||
Provisions created | 15 | ||
Provisions used | |||
Provisions cancelled | (8) | ||
Current | 35 | ||
Non-current | |||
Dismantling and clearing of cellular and other sites [Member] | |||
Disclosure of other provisions [line items] | |||
Balance as at January 1, 2018 | 47 | ||
Provisions created | 1 | ||
Provisions used | (2) | ||
Provisions cancelled | (2) | ||
Current | 6 | ||
Non-current | ₪ 38 | ||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Financial Risk Management (Deta
Financial Risk Management (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Financial Risk Management (Textual) | |
Minimum percentage of investment policy funds | 75.00% |
Minimum percentage of investment-grade securities | 95.00% |
Financial Instruments (Details)
Financial Instruments (Details) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | ||
Non-derivative financial liabilities | ||||
Trade and other payables | ₪ 1,702 | [1] | ₪ 1,719 | |
2019 [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | 1,558 | |||
Debentures | [2] | 1,392 | ||
Bank loans | 771 | |||
Total | 3,721 | |||
Financial liabilities for derivative instruments | ||||
Forward contracts on the Israeli CPI | 43 | |||
2019 [Member] | Company [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | 12 | |||
Debentures | [2] | 319 | ||
Total | 331 | |||
2020 [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | ||||
Debentures | [2] | 1,327 | ||
Bank loans | 835 | |||
Total | 2,162 | |||
Financial liabilities for derivative instruments | ||||
Forward contracts on the Israeli CPI | 47 | |||
2020 [Member] | Company [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | ||||
Debentures | [2] | 277 | ||
Total | 277 | |||
2021-2023 [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | ||||
Debentures | [2] | 3,895 | ||
Bank loans | 2,221 | |||
Total | 6,116 | |||
Financial liabilities for derivative instruments | ||||
Forward contracts on the Israeli CPI | 48 | |||
2021-2023 [Member] | Company [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | ||||
Debentures | [2] | 781 | ||
Total | 781 | |||
2024 and later [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | ||||
Debentures | [2] | 3,551 | ||
Bank loans | 1,533 | |||
Total | 5,084 | |||
Financial liabilities for derivative instruments | ||||
Forward contracts on the Israeli CPI | ||||
2024 and later [Member] | Company [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | ||||
Debentures | [2] | 1,644 | ||
Total | 1,644 | |||
Carrying Amount [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | 1,558 | |||
Debentures | [2] | 8,913 | ||
Bank loans | 4,721 | |||
Total | 15,192 | |||
Financial liabilities for derivative instruments | ||||
Forward contracts on the Israeli CPI | 138 | |||
Carrying Amount [Member] | Company [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | 12 | |||
Debentures | [2] | 2,455 | ||
Total | 2,467 | |||
Contractual Cash Flow [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | 1,558 | |||
Debentures | [2] | 10,165 | ||
Bank loans | 5,360 | |||
Total | 17,083 | |||
Financial liabilities for derivative instruments | ||||
Forward contracts on the Israeli CPI | 138 | |||
Contractual Cash Flow [Member] | Company [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | 12 | |||
Debentures | [2] | 3,021 | ||
Total | ₪ 3,033 | |||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. | |||
[2] | The Company's contractual repayments in the tables above reflects the original schedule of the Company's debentures. The Company's debentures including accrued interest in the amount of NIS 2,467 were classified as current maturities on the statements of financial position as of December 31, 2018, please refer to Note 33D. |
Financial Instruments (Details
Financial Instruments (Details 1) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Current assets | ||||||
Cash and cash equivalents | ₪ 1,104 | [1] | ₪ 2,386 | [1] | ₪ 762 | ₪ 581 |
Trade receivables | 1,773 | [2] | 1,915 | |||
Other receivables | 269 | [1] | 270 | |||
Investments including derivatives | 1,780 | [1] | 596 | |||
Total current assets | 5,023 | [1] | 5,335 | |||
Non-current assets | ||||||
Trade and other receivables | 470 | [1] | 493 | |||
Total non-current assets | 14,352 | [1] | 15,304 | |||
Total assets | 19,375 | [1] | 20,639 | |||
Current liabilities | ||||||
Total current liabilities | 6,908 | [1] | 4,111 | |||
Non-current liabilities | ||||||
Total non-current liabilities | 11,703 | [1] | 13,442 | |||
Total liabilities | 18,611 | [1] | 17,553 | |||
Unlinked [Member] | ||||||
Current assets | ||||||
Cash and cash equivalents | 1,058 | 2,322 | ||||
Trade receivables | 1,732 | 1,862 | ||||
Other receivables | 92 | 44 | ||||
Investments including derivatives | 1,613 | 445 | ||||
Total current assets | 4,495 | 4,716 | ||||
Non-current assets | ||||||
Trade and other receivables | 365 | 372 | ||||
Investments including derivatives | 49 | 51 | ||||
Total non-current assets | 414 | 423 | ||||
Total assets | 4,909 | 5,139 | ||||
Current liabilities | ||||||
Debentures, loans and borrowings | 3,365 | 1,213 | ||||
Trade and other payables | 1,382 | 1,344 | ||||
Total current liabilities | 4,747 | 2,557 | ||||
Non-current liabilities | ||||||
Debentures and bank loans | 6,879 | 9,104 | ||||
Other liabilities including derivatives | ||||||
Total non-current liabilities | 6,879 | 9,104 | ||||
Total liabilities | 11,626 | 11,661 | ||||
Total exposure in the statement of financial position | (6,717) | (6,522) | ||||
Forward transactions | (1,520) | (2,308) | ||||
Israeli CPI-linked [Member] | ||||||
Current assets | ||||||
Cash and cash equivalents | ||||||
Trade receivables | 22 | 36 | ||||
Other receivables | 136 | 154 | ||||
Investments including derivatives | 56 | 32 | ||||
Total current assets | 214 | 222 | ||||
Non-current assets | ||||||
Trade and other receivables | 105 | 121 | ||||
Investments including derivatives | ||||||
Total non-current assets | 105 | 121 | ||||
Total assets | 319 | 343 | ||||
Current liabilities | ||||||
Debentures, loans and borrowings | 632 | 645 | ||||
Trade and other payables | 53 | 56 | ||||
Total current liabilities | 685 | 701 | ||||
Non-current liabilities | ||||||
Debentures and bank loans | 2,758 | 3,333 | ||||
Other liabilities including derivatives | 95 | 159 | ||||
Total non-current liabilities | 2,853 | 3,492 | ||||
Total liabilities | 3,538 | 4,193 | ||||
Total exposure in the statement of financial position | (3,219) | (3,850) | ||||
Forward transactions | 1,350 | 1,994 | ||||
Foreign Currency Linked [Member] | ||||||
Current assets | ||||||
Cash and cash equivalents | 46 | 64 | ||||
Trade receivables | 19 | 17 | ||||
Other receivables | ||||||
Investments including derivatives | 110 | 119 | ||||
Total current assets | 175 | 200 | ||||
Non-current assets | ||||||
Trade and other receivables | ||||||
Investments including derivatives | 41 | 67 | ||||
Total non-current assets | 41 | 67 | ||||
Total assets | 216 | 267 | ||||
Current liabilities | ||||||
Debentures, loans and borrowings | ||||||
Trade and other payables | 166 | 237 | ||||
Total current liabilities | 166 | 237 | ||||
Non-current liabilities | ||||||
Debentures and bank loans | ||||||
Other liabilities including derivatives | 5 | 10 | ||||
Total non-current liabilities | 5 | 10 | ||||
Total liabilities | 171 | 247 | ||||
Total exposure in the statement of financial position | 45 | 20 | ||||
Forward transactions | ₪ 170 | ₪ 314 | ||||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. | |||||
[2] | The amount of trade receivables is stated net of the provision for doubtful debts. |
Financial Instruments (Detail_2
Financial Instruments (Details 2) - ₪ / shares | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
1 Euro [Member] | |||
Disclosure of risk management strategy related to hedge accounting [line items] | |||
Rate of change | 3.32% | 2.70% | (4.80%) |
Reporting date spot rate | ₪ 4.291 | ₪ 4.153 | ₪ 4.044 |
1 US dollar [Member] | |||
Disclosure of risk management strategy related to hedge accounting [line items] | |||
Rate of change | 801.00% | (9.80%) | (1.50%) |
Reporting date spot rate | ₪ 3.748 | ₪ 3.467 | ₪ 3.845 |
Israeli CPI in Points [Member] | |||
Disclosure of risk management strategy related to hedge accounting [line items] | |||
Rate of change | 0.90% | 0.40% | (0.30%) |
Reporting date spot rate | ₪ 141.26 | ₪ 140 | ₪ 139.59 |
Financial Instruments (Detail_3
Financial Instruments (Details 3) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Disclosure of financial assets [line items] | ||
Fixed rate instruments | ₪ (9,808) | ₪ (10,902) |
Variable rate instruments | (1,027) | (1,377) |
Financial liabilities [Member] | ||
Disclosure of financial assets [line items] | ||
Fixed rate instruments | (12,547) | (12,888) |
Variable rate instruments | (1,086) | (1,407) |
Financial assets [Member] | ||
Disclosure of financial assets [line items] | ||
Fixed rate instruments | 2,739 | 1,986 |
Variable rate instruments | ₪ 59 | ₪ 30 |
Financial Instruments (Detail_4
Financial Instruments (Details 4) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2018ILS (₪)Transactions | Dec. 31, 2017ILS (₪)Transactions | |
Disclosure of information about terms and conditions of hedging instruments and how they affect future cash flows [line items] | ||
Nominal value | ₪ 1,350 | ₪ 1,994 |
Fair value | (138) | (200) |
Capital reserve | ₪ 12 | ₪ 48 |
Debentures (Series 6) [Member] | ||
Disclosure of information about terms and conditions of hedging instruments and how they affect future cash flows [line items] | ||
Repayment date | December 2018 - December 2022 | December 2018 - December 2022 |
Number of transactions | Transactions | 6 | 9 |
Nominal value | ₪ 1,350 | ₪ 1,994 |
Fair value | (176) | (200) |
Capital reserve | ₪ 12 | ₪ 48 |
Financial Instruments (Detail_5
Financial Instruments (Details 5) - ILS (₪) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Secured Loans From Banks And Others [Abstract] | ||
Carrying amount | ₪ 12,590 | ₪ 12,938 |
Fair value | 12,550 | 13,696 |
Unlinked [Member] | ||
Secured Loans From Banks And Others [Abstract] | ||
Carrying amount | 4,235 | 4,436 |
Fair value | ₪ 4,324 | 4,693 |
Fair value weighted average discount rate | 3.09% | |
Issued to the public (CPI linked) [Member] | ||
Secured Loans From Banks And Others [Abstract] | ||
Carrying amount | ₪ 3,464 | 4,088 |
Fair value | ₪ 3,602 | 4,338 |
Fair value weighted average discount rate | 0.88% | |
Issued to the public (Unlinked) [Member] | ||
Secured Loans From Banks And Others [Abstract] | ||
Carrying amount | ₪ 4,681 | 4,097 |
Fair value | ₪ 4,405 | 4,322 |
Fair value weighted average discount rate | 2.86% | |
Issued to institutional investors (CPI linked) [Member] | ||
Secured Loans From Banks And Others [Abstract] | ||
Carrying amount | ₪ 8 | 15 |
Fair value | ₪ 8 | 17 |
Fair value weighted average discount rate | 0.55% | |
Issued to institutional investors (unlinked) [Member] | ||
Secured Loans From Banks And Others [Abstract] | ||
Carrying amount | ₪ 202 | 302 |
Fair value | ₪ 211 | ₪ 326 |
Fair value weighted average discount rate | 3.11% |
Financial Instruments (Detail_6
Financial Instruments (Details 6) - ILS (₪) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Financial assets held for trading | ||
Monetary funds and ETFs | ₪ 18 | ₪ 14 |
Marketable securities | 376 | 375 |
Forward contracts | (135) | (212) |
Contingent consideration for a business combination | (14) | |
Total | 259 | 163 |
Level 1 [member] | ||
Financial assets held for trading | ||
Monetary funds and ETFs | 18 | 14 |
Marketable securities | 376 | 375 |
Forward contracts | ||
Contingent consideration for a business combination | ||
Total | 394 | 389 |
Level 2 [member] | ||
Financial assets held for trading | ||
Monetary funds and ETFs | ||
Marketable securities | ||
Forward contracts | (135) | (212) |
Contingent consideration for a business combination | ||
Total | (135) | (212) |
Level 3 [member] | ||
Financial assets held for trading | ||
Monetary funds and ETFs | ||
Marketable securities | ||
Forward contracts | ||
Contingent consideration for a business combination | (14) | |
Total | ₪ (14) |
Financial Instruments (Detail_7
Financial Instruments (Details 7) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of detailed information about financial instruments [line items] | |||
Trade and other receivables presented in the statement of financial position | ₪ 1,773 | [1] | ₪ 1,915 |
Trade payables, gross | 883 | 1,062 | |
Trade and other payables presented in the statement of financial position | 1,702 | [2] | 1,719 |
Supply and Receive Communication Services [Member] | |||
Disclosure of detailed information about financial instruments [line items] | |||
Trade and other receivables, gross | 94 | 115 | |
Offset amounts | (83) | (99) | |
Trade and other receivables presented in the statement of financial position | 11 | 16 | |
Trade payables, gross | 121 | 143 | |
Offset amounts | (83) | (99) | |
Trade and other payables presented in the statement of financial position | ₪ 38 | ₪ 44 | |
[1] | The amount of trade receivables is stated net of the provision for doubtful debts. | ||
[2] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Financial Instruments (Detail_8
Financial Instruments (Details Textual) - ILS (₪) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Statement Line Items [Line Items] | ||
Interest rate, description | An increase/decrease of 1% in the interest rates at the reporting date would not have a material effect on profit and on capital. | |
Net fair value of these transactions is a liability | ₪ 12 | ₪ 3 |
Description of functional currency risks | A change of 1% of the CPI as at December 31, 2018 would have effect of NIS 14 on total equity and net income. This analysis assumes that all other variables, in particular interest rates, remain constant. In addition, A change of 10% in the US$ exchange rate as at December 31, 2018 would have immaterial effect on total equity and net income. | |
Debentures | ₪ 2,466 | |
Transactions amount | 75 | |
Company [Member] | ||
Statement Line Items [Line Items] | ||
Debentures | ₪ 2,467 |
Employee Benefits (Details)
Employee Benefits (Details) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Current liabilities for: | |||
Holiday | ₪ 112 | ₪ 115 | |
Sick leave | 133 | 142 | |
Early retirement | 329 | 16 | |
Current maturities of pensioner benefits | 7 | 7 | |
Total current liability for employee benefits | 581 | [1] | 280 |
Non-current liabilities for: | |||
Voluntary redundancy for employees transferred from civil service | 241 | ||
Liability for pensioner benefits | 115 | 120 | |
Severance compensation (net) (see composition below) | 54 | 57 | |
Early notice | 23 | 23 | |
Pension | 12 | 72 | |
Total non-current liabilities for employee Benefits | 445 | [1] | 272 |
Total liabilities for employee benefits | 1,026 | 552 | |
Composition of liabilities for severance pay: | |||
Liabilities for severance pay | 218 | 224 | |
Fair value of plan assets | (164) | (167) | |
Total composition of liabilities for severance pay | ₪ 54 | ₪ 57 | |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Employee Benefits (Details 1)
Employee Benefits (Details 1) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Employee Benefits [Abstract] | |||
Amount recognized as an expense for a defined contribution plan | ₪ 232 | ₪ 228 | ₪ 209 |
Employee Benefits (Details 2)
Employee Benefits (Details 2) - Average capitalization rate [Member] | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of defined benefit plans [line items] | ||
Severance compensation | 3.73% | 3.30% |
Retirement benefits | 4.10% | 3.60% |
Employee Benefits (Details 3)
Employee Benefits (Details 3) | 12 Months Ended |
Dec. 31, 2018 | |
Bezeq permanent employees [Member] | |
Schedule of Employees [Line Items] | |
Actuarial assumption of expected rate of salary | Regarding an expected wage increase for 2019-2026, an average update of 7% for young employees, and decreasing gradually to 2.7% at the age of 66. |
New Bezeq permanent employees [Member] | |
Schedule of Employees [Line Items] | |
Actuarial assumption of expected rate of salary | Average update of 3.2% for young employees, decreasing gradually to 1.4% at the age of 66. |
Bezeq non-permanent employees [Member] | |
Schedule of Employees [Line Items] | |
Actuarial assumption of expected rate of salary | 6.4% for young employees decreasing gradually to 0.1%, 2% ( in real terms ) for senior employees. 2% (in real term) for senior employees |
Pelephone employees [Member] | |
Schedule of Employees [Line Items] | |
Actuarial assumption of expected rate of salary | An increase of 3% in 2018 (2017- 3.1%), as set out in the collective agreement at Pelephone |
Bezeq International employees [Member] | |
Schedule of Employees [Line Items] | |
Actuarial assumption of expected rate of salary | An increase of 3%, as set out in the collective agreement at Bezeq International |
DBS employees [Member] | |
Schedule of Employees [Line Items] | |
Actuarial assumption of expected rate of salary | Rate of increase of 3.5% |
Employee Benefits (Details 4)
Employee Benefits (Details 4) | Dec. 31, 2018 | Dec. 31, 2017 |
Employee Benefits [Abstract] | ||
Discount rate - addition of 0.5% | (37.00%) | (29.00%) |
Rate of future salary increases - addition of 0.5% | 27.00% | 40.00% |
Rate of employees leaving - addition of 5.0% | (12.00%) | (17.00%) |
Employee Benefits (Details 5)
Employee Benefits (Details 5) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Severance compensation [Member] | ||
Disclosure of defined benefit plans [line items] | ||
Average weighted useful life of liabilities | 10 years | 10 years 4 months 24 days |
Retirement benefits [Member] | ||
Disclosure of defined benefit plans [line items] | ||
Average weighted useful life of liabilities | 14 years 1 month 6 days | 14 years 8 months 12 days |
Employee Benefits (Details Text
Employee Benefits (Details Textual) | 1 Months Ended | 12 Months Ended |
Dec. 16, 2018 | Dec. 31, 2018 | |
Employee Benefits (Textual) | ||
Description of retirement benefit plan termination terms | Terminate the employment of 163 long-standing permanent employees in each of the years 2015-2021 (the Company?s right is accumulated over the years). | |
Description of retirement benefit plan | A plan was approved for the implementation of an efficiency plan for 2019 for the retirement of 243 permanent employees (new and old). In addition, a voluntary retirement plan was decided on, by the end of the collective agreement period (the end of 2021) for all employees of Bezeq who were transferred to Bezeq from the Ministry of Communications (94 employees). The financial statements include an expense of NIS 452 for these plans. In addition, in 2018, retirement expenses were recognized in the amount of NIS 15, mainly for employee severance benefits in the Bezeq Group companies. | In the first half of 2018, the voluntary redundancy plan was approved, and 71 employees retired at a cost of NIS 92. |
Actuarial assumptions discount rate | 0.50% | |
Actuarial assumptions future salary increase | 0.50% | |
Actuarial assumptions employees leaving rate | 5.00% | |
Expected individual wage growth assumed | 2019-2026 |
Income Tax (Details)
Income Tax (Details) - ILS (₪) ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Current tax expenses | ||||
Expenses for the current year | ₪ 311 | ₪ 438 | ₪ 437 | |
Adjustments for prior years | (24) | 54 | (28) | |
Total current tax expenses | 287 | 492 | 409 | |
Deferred tax expenses (income) | ||||
Adjustments for prior years according to an assessment agreement | (54) | |||
Reversal of temporary differences according to an assessment agreement | 21 | |||
Write-off of a provision for tax due to impairment | (114) | |||
Creation and reversal of temporary differences | (232) | (112) | (33) | |
Total deferred tax expenses | (346) | (145) | (33) | |
Income tax expenses (benefit) | ₪ (59) | [1] | ₪ 347 | ₪ 442 |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Income Tax (Details 1)
Income Tax (Details 1) - ILS (₪) ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Income Tax [Abstract] | ||||
Income (loss) before income tax | ₪ (1,918) | ₪ 1,088 | ₪ 930 | |
Statutory tax rate | 23.00% | 24.00% | 25.00% | |
Income tax at the statutory tax rate | ₪ (441) | ₪ 260 | ₪ 232 | |
Effect of changes in tax rate on deferred taxes | 67 | |||
Expenses not recognized for tax purposes | 54 | 48 | 47 | |
Current year tax losses and benefits for which deferred taxes were not created | 168 | 39 | 124 | |
Temporary differences for impairment of assets for which no deferred tax assets were created (Note 9) | 160 | |||
Taxes in respect of previous years | (28) | |||
Income tax expenses (benefit) | ₪ (59) | [1] | ₪ 347 | ₪ 442 |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Income Tax (Details 2)
Income Tax (Details 2) - ILS (₪) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of detailed information about intangible assets [line items] | ||
Balance of deferred tax asset (liability) | ₪ 560 | ₪ 414 |
Recognized in profit or loss | 140 | 145 |
Write-off of deferred tax (See Note9) | 207 | |
Recognized in equity | (4) | 1 |
Balance of deferred tax assets (liability) | 903 | 560 |
Property, plant equipment, and intangible assets [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Balance of deferred tax asset (liability) | (323) | (337) |
Recognized in profit or loss | (14) | 25 |
Write-off of deferred tax (See Note9) | ||
Recognized in equity | ||
Balance of deferred tax assets (liability) | (337) | (323) |
Employee benefits plan [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Balance of deferred tax asset (liability) | 165 | 178 |
Recognized in profit or loss | 101 | (13) |
Write-off of deferred tax (See Note9) | ||
Recognized in equity | 2 | |
Balance of deferred tax assets (liability) | 268 | 165 |
Carry-forward losses for DBS [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Balance of deferred tax asset (liability) | 1,166 | 1,188 |
Recognized in profit or loss | (22) | |
Write-off of deferred tax (See Note9) | ||
Recognized in equity | ||
Balance of deferred tax assets (liability) | 1,166 | 1,166 |
Brand Names and Customers relationship [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Balance of deferred tax asset (liability) | (488) | (210) |
Recognized in profit or loss | 71 | 127 |
Write-off of deferred tax (See Note9) | 207 | |
Recognized in equity | ||
Balance of deferred tax assets (liability) | (210) | (488) |
Others [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Balance of deferred tax asset (liability) | 40 | 11 |
Recognized in profit or loss | (18) | 28 |
Write-off of deferred tax (See Note9) | ||
Recognized in equity | (6) | 1 |
Balance of deferred tax assets (liability) | ₪ 16 | ₪ 40 |
Income Tax (Details Textual)
Income Tax (Details Textual) - ILS (₪) ₪ in Millions | 1 Months Ended | 12 Months Ended | ||||
Apr. 27, 2017 | Sep. 15, 2016 | Jan. 22, 2015 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax [Line Items] | ||||||
Corporate tax rate | 23.00% | 24.00% | 25.00% | |||
Deferred tax expenses | ₪ 160 | |||||
Tax loss carry-forward | 72 | |||||
Capital loss carry forwards | 51 | |||||
Final tax assessment, description | The Company entered into a tax assessment agreement with the Israeli Tax Authority (the “Agreement”) with respect to final tax assessments for the tax years 2010-2014. The Agreement covers all pending tax assessments and other tax matters with respect to such years. According to the Agreement, the Company paid the Israeli Tax Authority NIS 25, including interest and CPI linkage differences. | The Company entered into a tax assessment agreement with the Israeli Tax Authority (the “Agreement”), with respect to final tax assessments with respect to: (i) tax years 2007-2009; and (ii) the sale of its legacy communications business that was completed on January 31, 2010. According to the Agreement, the Company paid the Israeli Tax Authority NIS 148, including interest and CPI linkage differences, in 24 monthly instalments starting in February 2015. | ||||
Tax losses on DBS | 5,000 | |||||
Additional losses | 19 | |||||
Tax liability arising | ₪ 25 | ₪ 148 | ||||
Description tax authority granted approval | The losses of DBS as at the merger date may be offset against the profits of the absorbing company, provided that in each tax year, it will not be permitted to offset an amount exceeding 12.5% (spread over eight years) of the total losses of the transferring company and the absorbing company, or 50% of the taxable income of the absorbing company in that tax year prior to offsetting the loss from previous years, whichever is lower. | |||||
DBS [Member] | ||||||
Income Tax [Line Items] | ||||||
Capital loss carry forwards | ₪ 1,166 |
Contingent Liabilities (Details
Contingent Liabilities (Details) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2018ILS (₪) | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | ₪ 169 | |
Amount of additional exposure | 5,127 | |
Amount of exposure for claims for which the amount of exposure cannot be assessed | 4,561 | |
Customer claims [Member] | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | 134 | |
Amount of additional exposure | 4,954 | |
Amount of exposure for claims for which the amount of exposure cannot be assessed | 730 | [1] |
Claims by enterprises and companies [Member] | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | 4 | |
Amount of additional exposure | 13 | [2] |
Amount of exposure for claims for which the amount of exposure cannot be assessed | 3,822 | [2],[3] |
Claims of employees and former employees of Group companies [Member] | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | ||
Amount of additional exposure | 3 | |
Amount of exposure for claims for which the amount of exposure cannot be assessed | ||
Claims by the State and authorities [Member] | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | 31 | |
Amount of additional exposure | 21 | |
Amount of exposure for claims for which the amount of exposure cannot be assessed | ||
Supplier and communication provider claims [Member] | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | ||
Amount of additional exposure | 65 | |
Amount of exposure for claims for which the amount of exposure cannot be assessed | 9 | |
Claims for punitive damages, real estate and infrastructure [Member] | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | ||
Amount of additional exposure | 71 | |
Amount of exposure for claims for which the amount of exposure cannot be assessed | ||
[1] | Including exposure in the amount of NIS 300 against a subsidiary and against four additional defendants. | |
[2] | Including exposure of NIS 2 billion for a motion for certification as a class action filed by a shareholder against Bezeq and officers in Bezeq, referring to alleged reporting omissions by Bezeq regarding the wholesale market and the reduction of interconnect fees, which the plaintiff estimates at NIS 1.1 billion or NIS 2 billion (depending on the method used to calculate the damage). On August 27, 2018, the court certified the claim as a class action. On October 28, 2018, Bezeq filed a motion for a rehearing of the certification ruling. Subsequently, the court decided to stay the proceedings until a ruling is made on the motion for a rehearing. | |
[3] | Two motions for certification of a class action seeking a total of NIS 1.8 billion, filed in June 2017 against Bezeq, officers in the Bezeq Group, B Communications and companies in the group of our controlling shareholders regarding the transaction relating to Bezeq's acquisition of DBS shares from Eurocom DBS Ltd. In accordance with the court's decision, a joint motion is expected to be filed instead of these two motions. The proceeding was stayed due to the investigation. The court approved the request of the Attorney General to inform the court by October 31, 2019, of the continued conduct of the proceedings in view of the ongoing investigation. |
Contingent Liabilities (Detai_2
Contingent Liabilities (Details Textual) - ILS (₪) ₪ in Millions | 1 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2018 | |
Bezeq Group Companies [Member] | ||
Contingent Liabilities (Textual) | ||
Plaintiff has alleged | ₪ 113 | |
Claims amount | 5,100 | |
Additional exposure of claims | 4,600 | |
Payment of damages | 2 | |
Exposure of claims | ₪ 406 | |
Description of plaintiff estimates | Plaintiff estimates at NIS 1.1 billion or NIS 2 billion | |
Class action seeking a total amount | ₪ 1,800 | |
Filed claim exposure | ₪ 15 | |
Bezeq Group Companies [Member] | Claims by enterprises and companies [Member] | ||
Contingent Liabilities (Textual) | ||
Payment of damages | 300 | |
Bezeq Group [Member] | ||
Contingent Liabilities (Textual) | ||
Paid taxes | ₪ 462 |
Agreements (Details)
Agreements (Details) ₪ in Millions | Dec. 31, 2018ILS (₪) |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | ₪ 2,220 |
2019 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 580 |
2020 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 439 |
2021 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 345 |
2022 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 307 |
2023 onwards [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 549 |
Space segments [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 822 |
Space segments [Member] | 2019 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 85 |
Space segments [Member] | 2020 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 85 |
Space segments [Member] | 2021 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 85 |
Space segments [Member] | 2022 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 82 |
Space segments [Member] | 2023 onwards [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 485 |
Content and copyright [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 1,398 |
Content and copyright [Member] | 2019 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 495 |
Content and copyright [Member] | 2020 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 354 |
Content and copyright [Member] | 2021 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 260 |
Content and copyright [Member] | 2022 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 225 |
Content and copyright [Member] | 2023 onwards [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | ₪ 64 |
Agreements (Details Textual)
Agreements (Details Textual) ₪ in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018ILS (₪) | Dec. 31, 2018USD ($) | Dec. 31, 2017ILS (₪) | |
Agreements (Textuals) | |||
Total amount of agreements for space segments full payment | ₪ 236 | ||
Business obligation to acquire terminal equipment | 78 | ₪ 147 | |
Acquisition of terminal equipment and the receipt of services | 23 | ||
Acquisition of fixed assets, intangible assets, additional assets, and routine services amount | ₪ 392 | ||
USD [Member] | |||
Agreements (Textuals) | |||
Additional IRU amount | $ | $ 465 |
Securities, Pledges and Guara_2
Securities, Pledges and Guarantees (Details) ₪ in Millions | 12 Months Ended |
Dec. 31, 2018ILS (₪) | |
Securities, Pledges and Guarantees (Textual) | |
Guarantees Amount | ₪ 158 |
Bank guarantees | ₪ 109 |
Description of exchange rate | The Ministry of Communications to secure the terms of their licenses (of which an amount of NIS 32 is linked to the CPI and NIS 37 is linked to the US$ exchange rate). |
Capital and Capital Reserves (D
Capital and Capital Reserves (Details) - Ordinary shares [member] - shares | Dec. 31, 2018 | Dec. 31, 2017 |
Earnings per share [line items] | ||
Number of shares, Authorized | 50,000,000 | 50,000,000 |
Number of shares, Registered and paid up | 29,889,045 | 29,889,045 |
Capital and Capital Reserves _2
Capital and Capital Reserves (Details Textual) - ILS (₪) ₪ / shares in Units, ₪ in Millions | 1 Months Ended | 12 Months Ended | ||
May 25, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Capital and Capital Reserves (Textual) | ||||
Ordinary shares par value | ₪ 0.1 | ₪ 0.1 | ||
January 20, 2019 [member] | ||||
Capital and Capital Reserves (Textual) | ||||
Ordinary shares issued | 7,385,600 | |||
Ordinary shares par value | ₪ 0.1 | |||
Gross proceeds from the offering | ₪ 118 | |||
Gross proceeds from the offering price | ₪ 16 | |||
Board of Directors [Member] | ||||
Capital and Capital Reserves (Textual) | ||||
Dividend declared | ₪ 11.88 | |||
Aggregate dividends | ₪ 355 | |||
Dividend payment date | Jun. 29, 2016 |
Revenues (Details)
Revenues (Details) - ILS (₪) ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Disclosure Of Detailed Information About Revenues [Line Items] | ||||
Domestic fixed line communications | ₪ 3,883 | ₪ 3,953 | ₪ 4,064 | |
Cellular | 2,401 | 2,500 | 2,588 | |
International communications, internet services and NEP | 1,338 | 1,467 | 1,480 | |
Multi-channel television | 1,473 | 1,650 | 1,745 | |
Others | 226 | 219 | 207 | |
Total revenues | 9,321 | [1] | 9,789 | 10,084 |
Fixed line telephony [Member] | ||||
Disclosure Of Detailed Information About Revenues [Line Items] | ||||
Domestic fixed line communications | 1,130 | 1,255 | 1,352 | |
Internet - infrastructure [Member] | ||||
Disclosure Of Detailed Information About Revenues [Line Items] | ||||
Domestic fixed line communications | 1,525 | 1,488 | 1,461 | |
Transmission and data communication [Member] | ||||
Disclosure Of Detailed Information About Revenues [Line Items] | ||||
Domestic fixed line communications | 769 | 775 | 835 | |
Cloud and digital services [Member] | ||||
Disclosure Of Detailed Information About Revenues [Line Items] | ||||
Domestic fixed line communications | 260 | 230 | 203 | |
Other services [Member] | ||||
Disclosure Of Detailed Information About Revenues [Line Items] | ||||
Domestic fixed line communications | 199 | 205 | 213 | |
Cellular services and terminal equipment [Member] | ||||
Disclosure Of Detailed Information About Revenues [Line Items] | ||||
Cellular | 1,713 | 1,743 | 1,777 | |
Sale of terminal equipment [Member] | ||||
Disclosure Of Detailed Information About Revenues [Line Items] | ||||
Cellular | ₪ 688 | ₪ 757 | ₪ 811 | |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Salaries (Details)
Salaries (Details) - ILS (₪) ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Salaries [Abstract] | ||||
Total salaries and incidentals | ₪ 2,574 | ₪ 2,578 | ₪ 2,544 | |
Less - salaries recognized in investments in property, plant and equipment and in intangible assets | 579 | 571 | 529 | |
Salaries | ₪ 1,995 | [1] | ₪ 2,007 | ₪ 2,015 |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
General and Operating Expense_2
General and Operating Expenses (Details) - ILS (₪) ₪ in Millions | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||
General And Operating Expenses [Line Items] | |||||
General and operating expenses | ₪ 3,394 | [1] | ₪ 3,906 | ₪ 4,021 | |
Terminal equipment and materials [Member] | |||||
General And Operating Expenses [Line Items] | |||||
General and operating expenses | 737 | 855 | 831 | ||
Interconnectivity and payments to domestic and international operators [Member] | |||||
General And Operating Expenses [Line Items] | |||||
General and operating expenses | 789 | 805 | 825 | ||
Maintenance of buildings and sites [Member] | |||||
General And Operating Expenses [Line Items] | |||||
General and operating expenses | [2] | 286 | 584 | 605 | |
Marketing and general expenses [Member] | |||||
General And Operating Expenses [Line Items] | |||||
General and operating expenses | 570 | 610 | 706 | ||
Services and maintenance by sub-contractors [Member] | |||||
General And Operating Expenses [Line Items] | |||||
General and operating expenses | 277 | 260 | 261 | ||
Vehicle maintenance expenses [Member] | |||||
General And Operating Expenses [Line Items] | |||||
General and operating expenses | [2] | 82 | 156 | 164 | |
Content services expenses [Member] | |||||
General And Operating Expenses [Line Items] | |||||
General and operating expenses | ₪ 653 | ₪ 636 | ₪ 629 | ||
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. | ||||
[2] | See Note 2.I.1 for information about early adoption of IFRS 16, Leases. |
General and Operating Expense_3
General and Operating Expenses (Details Textual) - ILS (₪) ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
General and Operating Expenses (Textual) | |||
Operating and general expenses for investments in fixed assets and intangible assets | ₪ 45 | ₪ 65 | ₪ 64 |
Other Operating Expenses, Net_2
Other Operating Expenses, Net (Details) - ILS (₪) ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Other Operating Expenses (Income), Net [Abstract] | ||||
Provision for severance pay in early retirement | ₪ 559 | ₪ 23 | ₪ 96 | |
Provision for claims | 91 | 19 | (4) | |
Capital gain from sale of property plant and equipment | 1 | (27) | (86) | |
Profit from sale of an associate | (15) | |||
Others | (1) | 5 | 15 | |
Other operating expenses (income), net | ₪ 635 | [1] | ₪ 20 | ₪ 21 |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Financing Expenses, Net (Detail
Financing Expenses, Net (Details) - ILS (₪) ₪ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Financing Expenses (Income) [Abstract] | ||||
Income on bank deposits, investments and others | ₪ (1) | ₪ (2) | ₪ (13) | |
Change in fair value of financial assets measured at fair value through profit or loss | (27) | (7) | (29) | |
Income in respect of credit in sales, net of discount | (30) | (35) | (42) | |
Linkage and exchange rate differences, net | (16) | |||
Other finance income | (31) | (25) | (23) | |
Total financing income | (89) | [1] | (69) | (123) |
Interest expenses on financial liabilities | 472 | 445 | 871 | |
Linkage and exchange rate differences, net | 64 | 48 | 38 | |
Change in contingent consideration in a business combination | 43 | (14) | 55 | |
Change in fair value of financial assets measured at fair value through profit or loss | 39 | 23 | ||
Financing expenses for employee benefits, net | 9 | 35 | 15 | |
Financing expenses for lease commitments | 26 | |||
Other financing expenses | 6 | 33 | 52 | |
Total financing expenses | 620 | [1] | 586 | 1,054 |
Financing expense, net | ₪ 531 | ₪ 517 | ₪ 931 | |
[1] | For information regarding early adoption of IFRS 16, Leases, see Note 2.I.1. |
Earnings (Loss) per Share (Deta
Earnings (Loss) per Share (Details) - ILS (₪) ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings (loss) attributable to ordinary Shareholders | |||
Basic earnings (loss) for the year | ₪ (1,029) | ₪ 78 | ₪ (236) |
Effect of diluted per share loss in a subsidiary | |||
Diluted earnings (loss) for the year | ₪ (1,029) | ₪ 78 | ₪ (236) |
Earnings (Loss) per Share (De_2
Earnings (Loss) per Share (Details 1) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings (Loss) per Share [Abstract] | |||
Weighted average number of ordinary shares (basic and diluted) | 29,889 | 29,889 | 29,889 |
Transactions with Related Par_3
Transactions with Related Parties (Details) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Transactions with Related Parties [Abstract] | ||
Receivables - associates | ₪ 7 | ₪ 8 |
Liabilities to related parties, net | 6 | (23) |
Advanced payment to Eurocom DBS (not including interest) for contingent consideration | ₪ 99 | ₪ 99 |
Transactions with Related Par_4
Transactions with Related Parties (Details 1) - ILS (₪) ₪ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Revenues | |||||
From associates | ₪ 6 | ₪ 8 | ₪ 7 | ||
From related parties | 31 | 23 | 13 | ||
Expenses | |||||
To related parties | 54 | [1] | 122 | 110 | |
To associates | 5 | 5 | 2 | ||
Investments | |||||
Related parties | 1 | 28 | 59 | ||
Acquisition of DBS | (70) | [2] | 55 | ||
Revised fair value of the excess advance payments for acquisition of DBS | ₪ 43 | [2] | ₪ 56 | [2] | |
[1] | Related-party expenses include amounts paid by DBS to Space Communications Ltd. ("Spacecom") up to May 3, 2018. It should be noted subsequent to this date, the Company believes, based on information it received, that Spacecom ceased to be a related party. In 2018, DBS paid a total of NIS 74 to Spacecom. | ||||
[2] | Adjustment of the liability for contingent consideration for a business combination with DBS and adjustment of the fair value estimate of the amount expected to be returned to the Company from the excess of the advance payments that it paid, recognized as financing income, net. |
Transactions with Related Par_5
Transactions with Related Parties (Details 2) | 12 Months Ended | |
Dec. 31, 2018 | ||
December 8, 2015 [Member] | ||
Disclosure of transactions between related parties [line items] | ||
Approval date of the general meeting (after approval of Bezeq's audit committee and Board of Directors) | December 8, 2015 | [1] |
Nature of the transaction | Amendment to the framework agreement between Pelephone and Eurocom Cellular Communications Ltd, so that it will be extended to other products and brands, including related services for all products and its extension until December 31, 2018 (or three years after the acquisition date of any additional products or brands, whichever is earlier). | [1] |
Amount of the transaction | Annual scope of up to NIS 50 (for all the products). | [1] |
June 30, 2016 [Member] | ||
Disclosure of transactions between related parties [line items] | ||
Approval date of the general meeting (after approval of Bezeq's audit committee and Board of Directors) | June 30, 2016 | [2] |
Nature of the transaction | Extension of the amended agreement of Bezeq with Eurocom Communications Ltd. ("Eurocom Communications") for ongoing management and consultation services for the Company for a period of three years. The management agreement was terminated on April 25, 2018. | [2] |
Amount of the transaction | For the period between January 1, 2018 and April 25, 2018, an amount of NIS 800,000 was not paid and was offset against a debt. | [2] |
April 3, 2017 [Member] | ||
Disclosure of transactions between related parties [line items] | ||
Approval date of the general meeting (after approval of Bezeq's audit committee and Board of Directors) | April 3, 2017 | [3] |
Nature of the transaction | Approval of the Bezeq group vote at the general meeting of DBS in favor of the agreement between DBS and Space Communications Ltd. ("Spacecom" and "the Parties" respectively) with an amendment/addendum to the existing agreement between the parties dated November 4, 2013, for the lease of satellite segments in Spacecom's satellites ("the Agreement"), including in favor of implementation of the Agreement. The validity of the Agreement remains the same as the original agreement, namely, until the end of 2028. | [3] |
Amount of the transaction | A total nominal cost of up to USD 263 for the entire term of the Agreement (until December 31, 2028), reflecting an average annual cost of USD 21.9. It should be noted that the overall cost of the Agreement may be lower if surplus revenue sharing mechanisms are applied and/or the assumptions set out in the amendment to the Agreement. For further information, see Note 23) | [3] |
[1] | The Company has a personal interest in the transaction, since Eurocom Cellular Communications Ltd. (a party to the transaction), is controlled by Eurocom Communications, which is the controlling shareholder (linked) of the Company. | |
[2] | The management agreement stipulated that Eurocom Communications will provide the services of Shaul Elovitch, who will serve as executive chairman of the Board of Directors of the Company and its subsidiaries, with a position of 70%. In addition, it was determined that Eurocom Communications will provide directors on its behalf, to serve on the boards of directors of the Company and the subsidiary companies. Eurocom will also provide ongoing consulting services as follows: (A) directors' compensation, consisting of annual participation compensation and actual participation compensation based on a maximum amount for one meeting (as this term is defined in the Companies Regulations (Rules for Compensation and Expenses of an External Director), 2000), based on the relevant rating of the Company of the subsidiary/sub-subsidiary (as the case may be) at that date, for the participation of the directors serving on behalf of the Company's controlling shareholders, as part of their membership and their position as directors in the Company and/or its subsidiaries and the various committees, subject to adjustments in accordance with their number and presence at meetings; (B) NIS 3.5 per year for the service and activities of Shaul Elovitch as active chairman of the Board of Directors of the Company and its subsidiaries; and (C) NIS 432 thousand per year for ongoing consultation services. On July 26, 2018, Bezeq Board of Directors resolved that the provision of all components of the services under the Management Agreement was de facto discontinued on April 25, 2018, and determined the amount of NIS 800,000 due to Eurocom Communications from the Bezeq, for the period between January 1, 2018 and April 25, 2018 should not be paid, due to the restrictions imposed on the activities of Shaul Elovitch and other directors who serve or who served on the Board of Directors of Bezeq and its subsidiaries on behalf of Eurocom Communications in the reporting year, in connection with the investigation conducted by the ISA and the Israel Police. The amount was not paid to Eurocom Communications in practice but was deferred and offset against the debt of Eurocom Communications to Bezeq. | |
[3] | Bezeq had a personal interest in the transaction as at the date of its approval, since, as at the date of the transaction, Spacecom was controlled by Eurocom Communications, the ultimate controlling shareholder of Bezeq. To the best of the Company's knowledge and in accordance with information provided to the Company by Eurocom Communications, the link between Eurocom Communications and Spacecom has been severed, since the court appointed a receiver for the shares of Spacecom held by Eurocom Communications ("the Spacecom Shares under Receivership"), which holds the full voting rights, and in view of the fact that as Bezeq was informed, the value of the collateral held by the receiver, including the value of the Spacecom Shares under Receivership, does not exceed the amount of the debt underlying the appointment of the receiver. |
Transactions with Related Par_6
Transactions with Related Parties (Details 3) - ILS (₪) ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Transactions with Related Parties [Abstract] | |||
Employee benefits | ₪ 2 | ₪ 2 | ₪ 2 |
Transactions with Related Par_7
Transactions with Related Parties (Details Textual) - ILS (₪) ₪ in Millions | Jul. 26, 2018 | Jun. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Transactions with Related Parties (Textual) | |||||
DBS paid total amount to Spacecom | ₪ 74 | ||||
Management agreement, description | The management agreement stipulated that Eurocom Communications will provide the services of Shaul Elovitch, who will serve as executive chairman of the Board of Directors of the Company and its subsidiaries, with a position of 70%. In addition, it was determined that Eurocom Communications will provide directors on its behalf, to serve on the boards of directors of the Company and the subsidiary companies. Eurocom will also provide ongoing consulting services as follows: (A) directors’ compensation, consisting of annual participation compensation and actual participation compensation based on a maximum amount for one meeting (as this term is defined in the Companies Regulations (Rules for Compensation and Expenses of an External Director), 2000), based on the relevant rating of the Company of the subsidiary/sub-subsidiary (as the case may be) at that date, for the participation of the directors serving on behalf of the Company’s controlling shareholders, as part of their membership and their position as directors in the Company and/or its subsidiaries and the various committees, subject to adjustments in accordance with their number and presence at meetings; (B) NIS 3.5 per year for the service and activities of Shaul Elovitch as active chairman of the Board of Directors of the Company and its subsidiaries; and (C) NIS 432 thousand per year for ongoing consultation services. | ||||
Management agreement discontinued, description | Bezeq Board of Directors resolved that the provision of all components of the services under the Management Agreement was de facto discontinued on April 25, 2018, and determined the amount of NIS 800,000 due to Eurocom Communications from the Bezeq, for the period between January 1, 2018 and April 25, 2018 should not be paid, due to the restrictions imposed on the activities of Shaul Elovitch and other directors who serve or who served on the Board of Directors of Bezeq and its subsidiaries on behalf of Eurocom Communications in the reporting year, in connection with the investigation conducted by the ISA and the Israel Police. The amount was not paid to Eurocom Communications in practice but was deferred and offset against the debt of Eurocom Communications to Bezeq. | ||||
Services agreement, description | The Company's shareholders approved the company’s entering into a Services Agreement with Eurocom Communications pursuant to which it will provide the Company with the services of its Legal Department in consideration of a monthly fee of NIS 20 thousand, plus an annual fixed amount of up to NIS 8 thousand in respect of various other expenses to be paid against receipts and documentation. Based on our prior experience, we estimated that the scope of the legal services provided to the company averaged approximately 60 hours per month on an annual basis. The legal services’ portion of the Services Agreement was terminated on March 31, 2018. | ||||
Lease annual rent | ₪ 110 | ||||
Capital fees paid, amount | ₪ 288 | ₪ 110 |
Subsequent Events (Details)
Subsequent Events (Details) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2018ILS (₪)Employees | Dec. 31, 2017ILS (₪) | |
Subsequent Events (Textual) | ||
Repayment of the debt | ₪ 43 | |
B Communications [Member] | ||
Subsequent Events (Textual) | ||
Repayment of the debt | ₪ 400 | |
B Communications [Member] | Series C Debentures [Member] | ||
Subsequent Events (Textual) | ||
Annual coupon percentage | 1% to 4.6% | |
Equity attributable to shareholders decrease | ₪ 750 | |
Additional annual coupon percentage | 0.25% to 4.85% | |
March 14, 2019 [Member] | DBS [Member] | ||
Subsequent Events (Textual) | ||
Collective arrangement, description | DBS signed a collective arrangement with the Histadrut Federation of Labor and the employees' representatives regarding retrenchment and synergy procedures, commencing on June 1, 2010 until December 31, 2021 ("the Arrangement"). | |
Number of employees terminate | Employees | 325 | |
Estimated cost arrangement additional financial benefits to the employees | ₪ 68 | |
March 2019 [Member] | Minimum [Member] | ||
Subsequent Events (Textual) | ||
Aggregate material decline cumulative range | 700 | |
March 2019 [Member] | Maximum [Member] | ||
Subsequent Events (Textual) | ||
Aggregate material decline cumulative range | 800 | |
May 5, 2019 [Member] | Bezeq [Member] | ||
Subsequent Events (Textual) | ||
Amount received from property sale | 377 | |
Amount paid to full permit fees and improvement | 250 | |
Claims amount | 450 | |
May 5, 2019 [Member] | ||
Subsequent Events (Textual) | ||
Investment for insurance | 950 | |
May 14, 2019 [Member] | ||
Subsequent Events (Textual) | ||
Total cash investment | ₪ 640 |